Abstract:In 2012 China's macro economy experienced a mild slowdown, while the micro economy suffered a serious quench. With a decrease of GDP growth rate by 1.8 percent, the profit growth rate of the enterprises declined from 27.3% to -2.7% . Bad news from the micro economy keeps coming out. It seems that the enterprises have got into a trouble as difficult as that at the end of 2008. How to explain the coexistence of the macro mild slowdown a... 展开
Abstract:In 2012 China's macro economy experienced a mild slowdown, while the micro economy suffered a serious quench. With a decrease of GDP growth rate by 1.8 percent, the profit growth rate of the enterprises declined from 27.3% to -2.7% . Bad news from the micro economy keeps coming out. It seems that the enterprises have got into a trouble as difficult as that at the end of 2008. How to explain the coexistence of the macro mild slowdown and the micro serious quench? The answer presented in this paper goes as following: The credit expanded dramatically after the 2008 crisis, and the enterprises accumulated a rather high debt/asset ratio. With such a high financial leverage, the enterprises became sensitive when they suffered a negative shock. We expect that China will keep 8% GDP growth rate in 2013. But if enterprises' profit continues to deteriorate and the other lagged effects get dispersed, the micro foundation of macroeconomic stabilization will be fragile. Therefore we should avoid the policies like credit expansion. At the same time, the following measures are suggested: tax reduction, stabilization of the asset price, promotion of technical progress and consolidation of the independence of the monetary policy.
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