How Can The Fiscal And Monetary Policies Of The Demand Side Continue To Exert Force?

In November, official PMI fell to 49.6%, down 0.2 percentage points from last month, the lowest since August 2012.

In the same month, Caixin PMI also stayed under the ups and downs line for 9 months in a row.

The value of Caixin is 48.6%, although it has picked up slightly, it still lingers in the ninth months after the ups and downs.

The key is that several of the most important and key sub indicators are too poor.

The new export orders, backlog orders, purchase prices of raw materials, and production activity expectations fell by more than 1 percentage points in 4 indices.

In October, official PML showed signs of stabilization on September.

In November, the PMI value has been maintained below 50 for 4 consecutive months and a little dive.

Turning around again in November shows that there is a certain fluctuation in the bottom of the economy, and the economy is still facing a downward pressure.

What should arouse more attention is that the small and medium-sized enterprises are becoming more and more depressed.

Data show that the PMI index of large enterprises has been above the withered line for 3 consecutive months, and the recovery trend is good. On the contrary, the PMI index of medium-sized and small enterprises has continued to deteriorate, dropping to 48.3% and 44.8% respectively in November, creating a new low since February 2012.

This shows that a series of policies and measures to support SMEs are not effective.

The recession is the biggest focus of the economy. Without eradication, the economy will not recover.

At the same time, PMI for 3 months in a big business on the withered line also suffered a serious decline in profits.

Manufacturing is very important in the whole economy, and small and medium-sized enterprises are the core.

At present, both the "key" and the "core" are facing a crisis, and the whole economy is very worrying.

How to do it?

They all thought of the role of fiscal and monetary policies.

Fiscal and monetary policies are also called demand side stimulation policies, and the founders are Keynes, the father of demand policy.

The three largest economies in the United States, Europe and Japan all adopt the demand side management policy.

Facing PMI innovation, low refraction economic extreme

How can the fiscal and monetary policies of the demand side continue to exert force?

We must have a clear and clear understanding of supply side reform.

The core of supply side reform is not to expand extensive production capacity, but to increase TFP.

This is the key and core.

Policy means, including decentralization, deregulation, financial reform, state-owned enterprises reform, land reform and innovation capability, are essentially the way to increase TFP from the perspective of supply side management.

We must not understand the supply side reform.

What needs to be concerned is that although PMI has hit a new low, the bright spots in steady growth have been highlighted.

The development trend of the service industry is good. In November, the PMI of non manufacturing industry increased by 0.5 percentage points to 53.6%.

Near the end of the year, holiday consumption is expected to continue to stimulate residents' consumption enthusiasm, and the consumer oriented service industry will continue to promote the foundation.

In particular, it is not easy to achieve sustained growth in the strict implementation of the eight provisions and the consumption of public funds.

These new bright points of economic growth will intensify with the advance of supply side reform.

In short, the future.

Not pessimistic!

There is no room for monetary policy to cut interest rates. Let us focus on whether the deposit rate can continue to be lowered.

Whether or not to reduce the deposit rate depends on whether the foreign exchange occupation is decreasing, and whether the foreign exchange occupation is declining or not depends on whether the foreign reserves of the central bank are reduced.

If there is a drop, there will be room for reduction.

The key to the steady growth of monetary policy lies in open market operations and various forms of refinancing.

Fiscal policy should be an important means of steady growth.

The emphasis is on tax policy instruments.

The super scale tax reduction policy should be resolutely promulgated, and all kinds of fees and charges will be reduced.

On the basis of demand side macroeconomic policy, we should also make good supply side articles.

In the face of excess capacity and the heavy task of housing de stocking, the supply side reform is more difficult.

From the perspective of labor and commodity supply, the third industry has larger supply space, and the potential of government services is huge.

Seizing the supply of these two aspects has great effect on economic growth.