Why Is China'S Economic Downturn So Long?

Usually, demand side factors are mostly short-term factors, and supply side factors are long-term factors.

Short term factors refer to the "three carriages". Many people have misunderstandings about the "three carriages". They believe that the driving force of economic growth is only "three carriages". External demand can not expand domestic demand, and investment can not stimulate consumption.

The side effects of driving the economic growth through the "three carriages" are beginning to show.

After the financial crisis in 2008, the Chinese government pulled the rapid economic growth in a short period of time through a series of economic stimulus policies, but as time went on, its side effects began to highlight and the marginal benefits of the stimulus policies were also declining.

Strictly speaking, the "three carriages" are not the driving force for economic growth.

"Three carriages" are only three components of GDP. They are special means of smoothing economic fluctuations in special economic times, and are not the means to stimulate economic growth in ordinary times. Moreover, the "three carriages" will stimulate economic growth mainly through investment and other economic stimulus policies, which will produce side effects and sequela.

Let's take a look at the facts first.

The export of this "horse drawn carriage" has been a driving force for China's economic growth for a long time, especially after China's accession to the WTO, the annual growth rate of China's exports has reached 20% or even more than 30%.

But in the past two or three years, export growth has dropped continuously, and has dropped to 6.1% in 2014. It has dropped to -0.8% in the first 7 months of 2015.

That is to say, its pulling effect on China's economy has basically lost.

Investment? Indeed, investment has been driving our country for many years.

The main factors.

Investment is mainly made up of three investments, including manufacturing, infrastructure and real estate, which are now being restricted.

Manufacturing investment is constrained by overcapacity. Infrastructure investment is constrained by the pressure of local government debt. Real estate has entered the downstream channel and investment has also been affected.

So the driving force of investment is far less than before.

The last "carriage" --

The growth rate is relatively stable and the contribution rate to GDP has increased, but it is only because the contribution rate of investment to GDP is relatively downward, and the contribution rate of consumption is relatively higher.

Because of the incomplete reform of the income distribution system and the lag of social welfare system reform, consumption has been pulled.

The strength of growth is very limited.

The conclusion is that institutional change refers to reform; structural optimization refers to industrialization, urbanization and regional economic integration; and the upgrading of factors refers to technological progress, increasing human capital and promoting information technology; and the "three engines" correspond to the new reform, pformation and innovation of the new central leadership.