China Academy of Social Sciences Sees L-shaped Economic Recovery

18

A leading expert from the China Academy of Social Sciences says that the Chinese economy has already entered an L-shaped recovery.

A new opinion piece co-authored by Yan Kun, acting vice-chair of the Fiscal and Taxation Research Centre of the China Academy of Social Sciences, and Zhang Peng, a researcher with the Chinese Academy of Fiscal Sciences, points the slew of positive data from the first quarter of 2017 as heralding a genuine recovery for the Chinese economy.

“The strong synergistic relationship between these indices effectively reflects their authenticity, and the fact that the foundations for stable, long-term economic development are solid,” said the co-authors in a new opinion piece for Beijing’s Economic Information Daily.

“In 2017, the core macro-economic performance has been the entry into the bottom of an L-shape..the economy has bottomed out and stabilised, and will continually turn good.”

According to official figures Q1 GDP posted a year-on-year gain of 6.9% to hit 18 trillion  yuan, rising 1.3% compared to the preceding quarter.

Fixed asset investment saw a strong recovery, rising by 9.2% year-on-year to hit 9.38 trillion yuan. Manufacturing, infrastructure and real estate development accounted by for 72.2% of all fixed asset investment, and contributed 86.2% to investment growth.

Chinese citizens also saw steady growth in their earning, with disposable incomes rising 8.5% year-on-year to reach 7,184 yuan, for inflation-adjusted growth of 7.0%.

Ramifications of an L-shaped recovery

Yan and Zhang note that the two areas which are a chief concern from a risk perspective are productivity and assets.

With respect to productivity, output could ease which would in turn create depreciation risk for productive fixed assets.

Asset prices may see large-scale increases and sharp declines in return on asset-ratios, exacerbating risk in association with real estate and foreign exchange markets.

 

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here