Forecast about the Development Trend of China's Economy in the Third Quarter and Policy Suggestions

Survey Report Issue 4 in 2017, No.19

【Abstract】

This issue of the Survey Report publishes the article entitled Forecast about the Development Trend of China's Economy in the Third Quarter and Policy Suggestions. The report holds that, the main problems in China’s economy to which we need to pay attention to in the third quarter include: the growth of capital investment faces a downward pressure; the growth of profit of industrial enterprises may continue to slow down; the anticipation for development of the property market is still not clear under strict supervision; the macro effect of strict supervision of finance has not fully delivered yet; the fiscal policy falls into a dilemma between maintaining stable growth and preventing risks; when implementing strict supervision and deleveraging, China must guard against the debt risk and the downward development risk of the economy; the anticipation that the Federal Reserve may shrink its balance sheet and raise the interest rate in the second half of the year may disrupt the stability of the financial market. After giving a forecast about the development trend of the economy in the third quarter of 2017, the article points out that the current good opportunity should be seized, and the following measures shall be adopted to solve deep rooted contradictions and problems that exist in the economy:

1. Precisely balance the relationship between prevention of risk and maintaining stable growth.

2. Implement a robust and neutral monetary policy, meanwhile, lay high stress on the flexibility of regulation and control of monetary policy.

3. Converge the supervision framework, unify the supervision standards, and change from institutional supervision to functional supervision.

4. Streamline the government's production oriented function, implement a capital budget, and improve the government debt management framework.

5. Continue to deepen the "loosening, management and service" reform, and promote transition from the old driving force to the new driving force for economic development.