The global economy may touch the apex of this round of growth cycle

After nearly 10 years of growth, global economic growth has slowed, and trade protectionism and counter-globalization trends have risen. The World Bank and the International Monetary Fund have lowered their global economic growth expectations for 2019, and the World Trade Organization has also lowered its global trade growth forecast from 3.7% to 2.6%. The direction of the economy is tainted by pessimism. The global economy may have touched the apex of this round of growth cycle and is expected to gradually enter the down phase. Globally, both developed and emerging economies have shown signs of weakening growth. Trade frictions have led to downside risks to the global economy, emerging economies are facing a new round of recession risks, and global macroeconomic policies are returning to a loose environment to nurture new risks. In 2019, the monetary policy of the world's major economies is changing, and it is likely to increase liquidity. The Fed may have interest rate cuts in the second half of the year. If global debt expansion is faster than economic output growth, it will definitely push up the leverage level, which will bring new debt bubble risks.

Recently, the McKinsey Global Institute released a report saying that China's dependence on the world economy has declined in the three key dimensions of trade, technology and capital, indicating that the Chinese economy is gradually turning to a growth model driven by domestic demand. At the same time, the world's dependence on the Chinese economy has increased. In this context, the direction of the world economy is not optimistic, and how the Chinese economy should go has become the focus of attention of all parties. From the perspective of consumption, investment and exports, although China's demand for slowing down is increasing, economic growth will continue to remain resilient.

China's economic growth will continue to maintain resilience

The role of tax reduction and fee reduction in the second half of the year will gradually be reflected, which will promote the improvement of manufacturing investment expectations. With the implementation of the limited production and de-capacity policies for many years, the upstream industrial industry is currently in a stage of restorative growth. The growth rate of real estate investment will slow down in the second half of the year, but it may still remain at a relatively high level. It may increase by about 10% in the whole year, which is obviously faster than the growth of fixed asset investment and infrastructure investment.

In the second half of the year, credit supply will still face downward pressure on the economy and the improvement in the credit status of the entity is not obvious. The timely and appropriate counter-cyclical adjustment of monetary policy will create a favorable liquidity environment for institutions to increase credit supply. Considering that the rise in institutional risk appetite is not obvious, the room for rebound in credit growth may be constrained. There is still a problem of liquidity imbalance between the current banking system institutions. It is estimated that the credit growth rate in 2019 may be around 13.5%, and the total credit for the whole year is about 18.5 trillion.

With the steady growth of credit growth and the large issuance of local government special debts, the growth rate of social welfare in the second half of the year will form a rebound trend. The annual growth rate is around 10.5%, with an increase of 21 trillion yuan. In line with the proactive fiscal policy, monetary policy may increase counter-cyclical adjustments in a timely and appropriate manner, which will have a positive impact on social growth and credit creation, and promote the growth of M2 growth.

In the short term, the focus of liquidity regulation is to alleviate the problem of bank credit stratification and liquidity imbalance. From the perspective of the effect of recent targeted support for liquidity and market reaction, it will take time to resolve the liquidity stratification problem. The money market interest rate is less affected by credit stratification. Under the policy of moderately increasing counter-cyclical adjustment, the money market interest rate operation center is expected to further decline.

In the second half of the year, China's import and export growth rate may decline, and the trade surplus of goods may narrow. The travel deficit may decline and will narrow the service trade deficit. It is expected that the current account will remain in surplus in the second half of the year, but the scale may be reduced. Under the background of the continuous strengthening of the macro and micro prudential management of the regulatory authorities and the basic stability of market expectations, the negative impact of external uncertainty will be weakened. The international balance of payments is expected to continue to maintain a double surplus pattern throughout the year.

The market expectation of the RMB exchange rate will improve, which will help the RMB to maintain a basically stable exchange rate against the US dollar. The probability of the RMB exchange rate against the US dollar will be significantly reduced during the year. As the US dollar index may be relatively weak, China's cross-border capital flows are basically balanced, and market expectations are improving, the RMB exchange rate may show a small appreciation in stages. However, due to the persistence of strong external uncertainty, the slowdown of China's economic growth and the narrowing of the current account surplus, the RMB exchange rate is difficult to continue to appreciate, and the appreciation will be limited. Need to continue to pay attention to the impact of future trade friction on the RMB exchange rate.

Macroeconomic policies must be active, steady, prudent and flexible.

Macroeconomic policies should be active, steady, prudent and flexible. Active fiscal policies should play a more counter-cyclical adjustment role in a timely and appropriate manner. From the perspective of fiscal revenue and expenditure in the first half of the year, active fiscal policies are working hard to improve efficiency. The pressure on fiscal revenue and expenditure in the second half of the year will increase, which may constrain the active fiscal policy. The local government's special debt policy can be further relaxed. After the issuance of 2.15 trillion yuan of special bonds, the special debt limit can be appropriately increased in the fourth quarter according to actual needs. It may be considered to expand the scope of special bonds as project capital. In addition to the major projects that meet the requirements, local infrastructure projects can also be applied.

In addition, monetary policy should be moderately and flexibly carried out in a timely and flexible manner to unblock the monetary policy transmission mechanism. In the case of negative externalities and significant downward pressure on the economy, monetary policy should maintain a moderate marginal loosening to stabilize growth. The expected increase in interest rate cuts in the United States has eased the pressure on domestic monetary policy adjustments. Stabilizing the exchange rate should not be a constraint to increase counter-cyclical adjustment.

At the same time, the benchmark interest rate adjustment for deposits and loans should be cautious. The fact that the benchmark interest rate has not been adjusted for a long time may not be the fundamental reason for the slow decline in corporate financing costs. As far as the current economic fundamentals are concerned, the policy effect of comprehensive adjustment of the benchmark interest rate may not be good. The current interest rate is not too hurried, and the conditions of various alternative paths are not mature enough. Considering that the benchmark interest rate for canceling deposits has a greater impact on the market, the loan pricing "replacement anchor" can be advanced. The consolidation of loan pricing can try to guide the LPR to link with policy and market interest rates, and promote the integration of the price-based monetary policy tools.