This year, or three times, the rate of economic growth will continue to slow down.

Monetary easing does not change the direct tax reform focus
Xiamen University and Xinhua News Agency Economic Reporting Co., Ltd. jointly released the "China Quarterly Macroeconomic Model (CQMM)" 2016 Spring Forecast Report in Beijing on the 25th. The report predicts that China's economic growth will continue to decline in the next two years under the pressure of investment slowdown, but the decline will slow down.
The report team believes that solving the current economic problems needs to start from the two aspects of supply and demand, and improve the supply structure, efficiency and expansion of demand. Experts said that the main tone of monetary policy will remain loose this year, and fiscal policy should promote structural tax cuts. The reform of direct taxes such as taxes and real estate taxes will be the key to helping China avoid huge fiscal deficits.

Loose this year or implement three times to reduce interest rates
Many experts believe that this year may continue to maintain a moderately loose monetary policy, and there are still several times of RRR cuts and one interest rate cut during the year. In terms of fiscal policy, structural tax cuts are undoubtedly the focus. Indirect taxes and turnover taxes are important aspects of tax cuts, but the adjustment of direct taxes such as individual taxes and real estate taxes is equally important and more difficult.
The report team believes that considering that the economy is still facing investment deceleration pressure in 2016, and the CPI is likely to have a relatively large inflation target of less than 3%, it is expected that the central bank will still change market expectations with a moderately loose monetary policy and reverse pessimism. Break the vicious circle of “debt-deflation”. It is expected that there will be a rate cut in the second quarter of this year, down 25 basis points; three downgrades may be implemented during the year, 50 basis points each time. The annual M2 growth rate was 13.4%.
The survey results of the "100 Chinese Economics Macroeconomic Situation and Policy Questionnaire (2016)" jointly conducted by the Xinhua News Agency and the Macroeconomic Research Center of Xiamen University also show that among 121 economists in related fields in China. Nearly 60% of the experts surveyed believe that the growth of M2 will continue to rise this year. 45% of experts expect the central bank to reduce the deposit reserve ratio in the first quarter in 2016, and 31% of experts expect the central bank to be the second in 2016. Quarterly rate cuts.
In terms of fiscal policy, the survey results show that 85% of experts believe that “further implementation of the tax reduction and fee reduction policy will leave more available funds for enterprises and market players”.
Gao Peiyong, dean of the Institute of Finance and Economics of the Chinese Academy of Social Sciences, pointed out that if the focus of fiscal policy is on tax cuts, it must be made clear that this round of tax cuts must fall on the structure, not the total. He stressed that the supply-side structural reform emphasizes the reduction of corporate income tax, but does not emphasize the reduction of personal income tax.
Gao Peiyong also said that under the background of promoting structural reforms on the supply side, he is determined to push the reform of the camp into full capacity this year. However, the tax reform is in fact divided into the reduction of indirect taxes and the addition of direct taxes. These two items must be promoted at the same time and cannot be biased towards one aspect. "If you don't want China to have a huge fiscal deficit, you must have a reform with direct tax increases. The point, difficulty, and focus of this tax system reform have always been locked in the reform of two types of taxes, that is, the comprehensive system of personal income tax. Reform and reform of real estate taxes," he said.

Addition supply side reform needs to accompany expansion of demand
A number of participants in the industry said that supply-side reforms should also focus on demand, and reform should not only be "subtraction" but also "addition."
Wang Yanwu, an associate professor at the Macroeconomic Research Center of Xiamen University, said in his speech that both the improvement of the supply structure and the expansion of demand must be grasped. If we simply reduce the inefficient supply excessively, we will not pay attention to the expansion of effective supply, which is not conducive to steady growth, resulting in a tightening of the merger and the economic downturn. "How to do 'addition' must be based on the shift of the demand structure, and supply around the changes in the overall market consumption structure in the next five or even ten years. Otherwise, there will be excess capacity eliminated, and a new overcapacity will be formed there. Not conducive to the allocation of resources," he said.
Many experts also said that in the supply-side reform process, we must give full play to the role of price competition in regulating the supply structure. "The implementation of price control through government administrative means, stifling the effect of price on monopoly, further amplifying demand, resulting in more serious mismatch between supply and demand." Wang Yanwu said.
Gao Peiyong also elaborated from the perspective of tax-price relationship. "Foreign commodity prices are naked, that is, price is cost plus profit, and Chinese commodity price is tax-included. Our price contains too many tax elements, not It fully reflects the status of resource allocation and plays the role of guiding the price signal optimization of resource allocation."
Experts at the meeting also gave advice on the potential risks of the “de-capacity” process on the supply side. Huang Zhiling, chief economist of China Construction Bank (4.580, 0.01, 0.22%), said that for the troubled traditional industries, it is impossible to take a simple shutdown, but should upgrade the traditional industries through mergers and acquisitions and upgrades as much as possible. For "zombie enterprises" that have no reorganization and transformation value, the market should be cleaned up, and the government only needs to do a proper social security system.

Trend economy growth will continue to slow
According to the survey of 100 Chinese economic economists' macroeconomic situation and policy questionnaires (2016), 76% of experts expect annual GDP growth rate to be between “6.5% and 6.8%”; 12% of experts expect “6.8” Between % and 7.0%"; 8% of experts expect "less than 6.5%"; 3% of experts expect "greater than 7.0%". According to this, more than 80% of experts believe that China's economy will show a further decline in 2016.
The report team believes that it should be highly valued that the current sustained economic slowdown is putting huge risks on China's economic operations. First, under the tremendous pressure of economic downturn, the process of China's economic restructuring has begun to slow down in 2015. Second, the continued decline in economic growth has caused the RMB depreciation to enter a self-reinforcing cycle. Finally, the economy continues to slow down and structural deflation. The increase has increased the risk of the economy falling into a debt crisis.
Huang Zhiling said that due to high energy consumption, high pollution industries, mining industry, overcapacity industries, low-end manufacturing scale. These industries continue to experience low growth and even shrinking growth in structural adjustment. Although they are in line with market expectations and policy expectations, they will also have a large negative impact on GDP. Although the high-tech industry, high-end equipment manufacturing industry, strategic emerging industries and some service industries are generally better, their scale is far less than the downturn industry. The positive contribution of the latter is not enough to completely offset the negative impact of the former. The pressure has been great. Wang Luolin, a special consultant and former deputy dean of the Chinese Academy of Social Sciences, believes that the problems in the Chinese economy today are fundamentally because the long-term extensive growth methods have not been adjusted and changed in time.
However, some experts are expecting a steady and positive economic situation this year. Zhang Liqun, deputy secretary-general of the Academic Committee of the Development Research Center of the State Council, said that in view of the trend of infrastructure investment and real estate investment this year, it showed a steady development trend. China's steady growth policy since 2012, the effect of demand side has been more and more manifested, which is one of the main reasons to support the economic stability in 2016. He believes that this year's economic growth level will not be lower than last year.

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