Abstract: China's economy has recovered rapidly since the third quarter and the recovery of industrial production has basically completed. Investment in infrastructure and real estate continues to grow at a high speed. The rebound in overseas demand also begins to stimulate the investment in manufacturing. Overall investment warms up rapidly. Consumption continues to pick up but has not fully recovered. Offline consumption such as catering is still in negative growth. It is expected that the gap will exist for a long time under the circumstance that there is still a risk of local outbreak of the epidemic. The export growth of medical supplies begins to decline, but the rebound in overseas demand leads to a rapid recovery in the export of other commodities, which fully compensates for the decline in the medical export growth. Overall export growth continues to rise. Import growth picks up as export grows and the domestic economy continues to improve. GDP growth rate in the third quarter will be about 4.1%, 0.9% higher than that in the second quarter. The cumulative GDP growth rate in the first three quarters has turned positive, with a cumulative growth rate of 0.4%. The economy will be improved in the fourth quarter and be expected to grow by around 2% for the year.

In terms of prices, due to the impact of the high base period and the rapid decline of non-food prices, CPI will drop quickly year on year while PPI will continue to rise in the case of global economic recovery. The scissors gap between CPI and PPI continues to be narrowed year on year.

In the third quarter, the issuance of government bonds increases rapidly, but the basic money released by the central bank is not enough to fully offset the impact of government bond financing. The excess reserve rate falls sharply, and the market interest rate rises sharply, which increases the cost of TB, local governments’ debts and urban investment debts. However, as the LPR remains unchanged and the central bank lowers the lending rate of small and micro enterprises through re-lending, the financing cost of real enterprises has not been raised significantly.

At present, the main difficulties are still the employment problem of fresh graduates and low-income groups and the survival problem of micro, small and medium-sized enterprises, especially for the service enterprises. With the coming winter, the increasing pressure of COVID-19 prevention will also add the difficulties for the recovery. It is suggested that the key objectives of the policy should be to ensure the employment of residents, the basic livelihood of people and the survival of market entities. The government should focus on the survival of the small, micro and medium-sized enterprises and the basic life of low-income groups.

Full report: https://thinktank.phbs.pku.edu.cn/2020/jingjifenxi_0925/17.html