Abstract: Since the fourth quarter of 2020, China's economy has continued the recovery trend of the previous two quarters and has nearly fully recovered. From the perspective of production, industrial production keeps a rapid growth and the service sector accelerates its pace on recovery. From the perspective of expenditure, in terms of investment, real estate investment remains resilient and manufacturing investment also begins to increase rapidly. Although infrastructure investment does not match up with the previous expectation, its rapid growth does not slow down. In terms of consumption, the retail sales of goods grow steadily, and automobiles makes a prominent contribution. The catering industry has also improved in general, but the recovery is not stable due to the impact of the epidemic in some regions. Although the situation of overseas epidemic is still severe, the external economy has begun to recover, which leads to a substantial increase in export. The improvement of domestic and external demand has also led to a rapid pickup in imports. With the rapid economic recovery, commodity prices, especially international bulk commodities prices, have risen sharply, driving up CPI and PPI month on month.

It is estimated that the GDP growth rate in the fourth quarter will reach 6.4%, with an annual GDP growth rate of 2.3%. The economy is expected to maintain the rapid growth in 2021, with a year-on-year growth of 9.8%.

At present, the major problems that the real economy is facing are: Firstly, commodity prices continue to rise, which may squeeze companies’ profits; Secondly, with the freight rising substantially, the export have been blocked; Third, the leverage ratio of the real economy has risen, along with the increasing risk of default. It is suggested that the policy should focus on increasing supply, regulating the market and keeping the macro leverage ratio basically stable.

Full report: https://thinktank.phbs.pku.edu.cn/2020/jingjifenxi_1230/3.html