Abstract: The foundation of economic recovery in the second quarter of 2021 still needs to be consolidated and the structural differentiation still exists. Although industrial production returns to the high position, the growth of it tends to slow down. The insufficiency in service industry still exists. Supply factors lead to the high prices of raw material, squeezing the profits of traditional manufacturers in the middle and lower reaches, especially small and medium-sized private enterprises. This delays the recovery of manufacturing investment. The slow issuance of special bonds also contributes to the low growth rate of infrastructure investment. Consumption picks up slowly and has a lower growth rate than it before the disease. the catering industry has just surpassed its year-on-year level in 2019. Due to the overseas economic recovery, the increasing demand for Chinese capital goods and intermediate goods supports the export. Price factors and domestic demand also contributed to the increase in import.

 

GDP growth in the second quarter is expected to be 7.9%, with a low base in the same period last year. Compared with the same quarter in 2019, the two-year average growth rate of GDP is 5.5%, higher than the two-year average growth rate of 5.0% in the first quarter of this year. However, this rate is lower than the annual growth rate of 6.1% in 2019 and 6.5% in the fourth quarter of last year, which indicates a slowdown in the overall economic growth.
 

At present, the major problems that the real economy is facing are: Firstly, the price of raw material remains high, squeezing the profits of corporate in the lower reach and weakening the recovery in investment. Secondly, the service sector picks up slowly, with the weak growth of income and the widened gap. This further makes obstacles for the recovery of consumption. It is suggested to add the supply of bulk commodities and increase the intensity of fiscal policies. Transfer payments to low-income groups should be expanded and the income gap should be narrowed.

Full report: https://thinktank.phbs.pku.edu.cn/2021/jingjifenxi_0701/34.html