Intern Li Xiaotong contributed to this article.

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China's official manufacturing PMI in March was 52%, with an expected 42.5% and a previous value of 35.7%. The PMI of non-manufacturing industry was 52.3%, and the previous value was 29.6%.

interpret

1, the resumption of work and production has accelerated, but both internal and external demand are weak, and expanding domestic demand is a top priority.

The impact of this epidemic has exceeded the global financial crisis in 2008, so we must make full preparations. As of March 3 1 day, the cumulative number of confirmed cases worldwide exceeded 800,000; The epidemic situation in China was basically controlled in late February, but the overseas epidemic began to break out in late February, and the United States, Italy, Spain, Germany and France became the hardest hit areas, and the turning point has not yet been seen. Some epidemiologists predict that the global epidemic will end in June, but some experts think it will cross the New Year. If the epidemic is controlled in summer, it is an optimistic estimate, and the damage caused is relatively controllable; However, if it lasts until the end of the year or even early next year, the global economic recession will be very fierce, and the risk of bankruptcy and unemployment will be greater.

The pandemic once triggered a global liquidity crisis, and a deep economic recession was inevitable. The United States and Europe launched a large-scale stimulus plan, which exceeded the international financial crisis in 2008; The recession in Europe and America will be transmitted to China through external demand, industrial chain, capital flow, financial market, epidemic input and cross infection. From February 19 to March 20, the cumulative decline in the US, Britain, France and Germany all exceeded 30%, and the US stock market 10 was blown for four times and bonds were also sold. Liquidity crisis is usually the precursor of financial crisis. In this context, the Federal Reserve cut interest rates to "zero interest rate" on March 15 and launched a $700 billion quantitative easing (QE) program. On March 23, it launched an "unlimited QE" program, and on March 27, Trump signed a "2 trillion" economic stimulus bill. On March 12, the European Central Bank announced that it would increase its asset purchase plan by120 billion euros, and on March 18, it added 750 billion euros. On March 7, Britain announced a loan guarantee plan of 330 billion pounds and provided 20 billion pounds to support small businesses, and Germany adopted an economic stimulus plan of10.2 trillion euros on March 23.

China/kloc-controlled the epidemic in February and resumed production in February-March. From the calculation method of PMI index, PMI index = the percentage of "increase" option+the percentage of "flat" option ×0.5, so the sharp rebound of PMI in March only reflects the rapid recovery of economic activities compared with that in February. From a year-on-year perspective, economic activities are far from returning to normal levels. Economic activities have resumed rapidly since the middle and late February. According to official data, as of March 28th, the average operating rate of industrial enterprises above designated size was 98.5%, and the rate of small and medium-sized enterprises returning to work was 76.8% on March 29th. From the high-frequency data, the average daily coal consumption of the six major power plants in March returned to 80.8% of the same period last year; On March 30th, the national return rate was 8 1.6%, and the cumulative return rate was 70.5% (China Unicom's wisdom footprint). The urban congestion delay index recovered to about 82% in the same period of last year's lunar calendar (Gaode data). In this context, the PMI of manufacturing and non-manufacturing industries rose sharply to 52% and 52.3% respectively in March, up by 16.3 and 22.7 percentage points respectively compared with that in February.

Specifically, the PMI data in March reflects five characteristics of the current economic situation: 1) demand recovery is weaker than production, both internal and external demand are weak and external demand is worse; 2) Prices continue to fall, and economic deflation is obvious; 3) The enterprise expects to improve month-on-month, but the inventory is overstocked; 4) All large, medium and small enterprises improved month-on-month, but small and medium enterprises were more difficult; 5) The recovery of service industry is weaker than that of manufacturing industry, and the recovery of construction industry is faster.

Returning to work is not equal to resuming production, and the impact of the epidemic has led to a decline in both internal and external demand, especially in the life service industry and export-oriented enterprises. For example, according to the report of Meituan Research Institute, as of March 9, only 34.6% of the merchants were operating normally, but more than 85% of them had less than10% of the same period last year. Affected by the overseas epidemic, export enterprises are currently facing the difficulties of order cancellation, production reduction and layoffs. In terms of employment, the urban unemployment rate climbed to a new high of 6.2% in February. In March, the PMI employee indices of manufacturing, service and construction industries were 50.9%, 46.7% and 53. 1% respectively, and employment in service industries was still shrinking.

At present, the main contradiction facing China's economy is insufficient total demand. 327 Politburo meeting of the Chinese Communist Party explicitly expanded domestic demand, launched a "new" round of infrastructure, and moderately relaxed monetary policy to prevent a large-scale wave of bankruptcy and unemployment. Our clear-cut initiative of "new infrastructure" ("It's time to start a new round of infrastructure") will help to expand demand, stabilize growth and employment in the short term, expand effective supply, release China's economic growth potential and improve people's livelihood and welfare in the long term.

Different from the academic school of hindsight, we have been pursuing forward-looking practical economics. In 20 19, it was put forward that "it's deflation after removing pigs" and "it's time to cut interest rates", which caused great controversy, but it was later verified by the monetary policy to cut interest rates and lower standards. In the second half of 20 19, facing the popular viewpoints of "economic stabilization" and "inventory cycle recovery", it was put forward that "the severity of the current economic situation should be fully estimated" and "the foundation of economic stabilization is not solid". In late February 2020, it was put forward that "it is time to start a new round of infrastructure", which triggered a big market discussion and was later verified by the evolution of the situation.

2. Although the situation at home and abroad is extremely grim, we are facing a once-in-a-lifetime historical opportunity.

Organic in danger:

1) Oil, stocks of European and American high-tech companies, natural gas, etc. purchased in the international market are now sold at a discount, either through sovereign wealth funds or through corporate mergers and acquisitions, and at the same time help countries and enterprises hit by the epidemic tide over the difficulties.

2) At the end of 2018, the Central Economic Work Conference proposed new infrastructure, but at the beginning of 20 19, the economy was in a small spring and the macro-economic environment did not have a large-scale start. In 2020, affected by the global epidemic and the economic recession in Europe and America, China's economy is significantly lower than the potential growth rate. Starting a proactive fiscal policy with new infrastructure as the core and infrastructure to make up for the shortcomings will help expand short-term effective demand and long-term effective supply. Moreover, the low cost of infrastructure construction and the sharp drop in commodity prices are conducive to promoting employment.

3) Help Italy, Germany, Spain, Iran, South Korea, the United States, etc., which have been hit hard by the epidemic. China is the world's largest manufacturer and producer of masks and alcohol. With the gradual control of the domestic epidemic, it can appropriately export related materials, increase publicity, and win the international hearts. Marshall Plan of the epidemic.

4) Accelerate the reform of emergency medical care, medical system, social governance, tax reduction and fee reduction, multi-level capital market, etc., and it is easier to form the reform with the least resistance.

5) Do not get involved in right and wrong, do not get involved in geopolitical conflicts, and strive for strategic opportunities and time windows for national development.

3. Demand recovery is weaker than production, both internal and external demand are weak and external demand is worse.

In March, the PMI of manufacturing industry was 52%, which was significantly higher than that of last month 16.3 percentage points. In terms of industries, 2 1 manufacturing industries have rebounded to varying degrees. Among them, the new kinetic energy recovered quickly, and the PMI of high-tech manufacturing industry was higher than the whole. In terms of key areas, the PMI of high-tech manufacturing, equipment manufacturing and consumer goods industries is 55.8%, 54.5% and 52.0%, among which the PMI of high-tech manufacturing is 3.8 percentage points higher than that of the manufacturing industry as a whole.

The recovery of demand is weaker than that of production, both internal and external demand are weak, and the overseas epidemic continues to ferment and impact China's exports. In March, the PMI production index was 54. 1%, up 26.3 percentage points from last month. The index of new orders and new export orders were 52.0% and 46.4% respectively, up by 22.7 percentage points and 17.7 percentage points from last month.

The external demand is weak, and the growth momentum of developed economies such as the United States and Europe is weakening, overlapping the impact of overseas epidemics. In March, the PMI of Markit manufacturing in the United States was 49.2%, down 1.5 percentage points from last month, and returned to threshold; The PMI of the euro zone was 44.8%, a sharp drop of 4.4 percentage points from last month; The PMI of German manufacturing industry, the locomotive of European economy, was 45.7%, down 2.3 percentage points from last month.

The import index was 48.4%, up by 16.5 percentage points from last month, and it was below threshold for 2 1 month in a row, indicating that domestic demand was weak.

4. The price continues to fall, and the risk of deflation intensifies.

The ex-factory price index in March was 43.8%, down 0.5 percentage points from last month; The purchase price index of major raw materials was 45.5%, down 5.9 percentage points from last month. The difference between the ex-factory price and the raw material price index narrowed from -7. 1 percentage point in February to-1.7 percentage point in March, indicating that the profit pressure of middle and lower reaches enterprises has improved compared with February, but the price drop has caused continuous pressure on the nominal profit growth of enterprises.

Recently, the prices of oil and other commodities have plummeted, and the risk of deflation has intensified. Recently, Russia, Saudi Arabia and the United States have been wrestling with each other on the oil issue, and the superimposed epidemic has hit global panic, and international oil prices have plummeted. In March, the average price of Brent crude oil was -40.0%, the price of industrial products in South China was -7.5%, and rebar was -7.8%.

5. The enterprise expects to improve month-on-month, but the inventory of finished products is overstocked.

The expected index of production and operation in March was 54.4%, up 12.6 percentage points from last month; The purchasing volume index was 52.7%, up 23.4 percentage points from last month. In March, the raw material inventory index was 49%, up 15. 1 percentage point from last month, indicating that the shortage of raw materials in the early stage was alleviated due to the smooth flow of logistics; The inventory of finished products was 49. 1%, up by 3 percentage points from last month, reflecting that the demand was still weak despite improvement. At the same time, the index of economic kinetic energy (new orders-finished goods inventory) rebounded 19.7 percentage points from last month.

Since the outbreak of the epidemic, China's fiscal and monetary efforts have been intensified, and the Politburo meeting emphasized the need to intensify macro-policy adjustment and implementation.

In terms of monetary policy, on March 1, China Banking and Insurance Regulatory Commission issued a document, giving enterprises a certain period of deferred interest payment arrangements for small and medium-sized enterprises that have expired since March 25, 2020. The loan interest payment date can be extended to June 30, 2020 at the longest. On March 13, the central bank decided to pay 0.5- 1 percentage point to the qualified bank targeted cuts to required reserve ratios on March 16, and an additional targeted cuts to required reserve ratios 1 percentage point to the qualified stock banks, releasing 550 billion yuan. On March 27th, Politburo meeting of the Chinese Communist Party emphasized that "a prudent monetary policy should be more flexible and moderate, guide the downward interest rate in the loan market, and maintain a reasonable and sufficient liquidity. It is necessary to give full play to the traction and leading role of financial policies such as refinancing, deferred repayment of principal and interest, dredge the transmission mechanism, ease the difficulty of financing, and provide accurate financial services for epidemic prevention and control, resumption of production and development of the real economy. " On March 30th, the bid rate of the 7-day reverse repurchase operation in the open market of the central bank was 2.20%, which was 2.40% before, down by 20BP.

In terms of fiscal policy, on March 27th, Politburo meeting of the Chinese Communist Party emphasized "appropriately raising the fiscal deficit ratio, issuing special government bonds, increasing the scale of local government special bonds, guiding the downward interest rate in the loan market, and maintaining reasonable and sufficient liquidity; It is necessary to implement various tax reduction and fee reduction policies and accelerate the issuance and use of local government special bonds. " According to State Taxation Administration of The People's Republic of China, the time limit for filing tax returns in March is extended to March 23rd according to law, and in areas that are still in the first-level response of epidemic prevention and control after the expiration, the relevant provincial tax bureaus can also appropriately extend the time limit for filing tax returns according to law to further help enterprises to alleviate the financial pressure.

6, large, medium and small enterprises have improved, but small and medium-sized enterprises are more difficult.

Large enterprises are better than small and medium-sized enterprises in production, demand and business expectation. In March, the PMI indexes of large, medium and small enterprises were 52.6%, 5 1.5% and 50.9%, respectively, rising by 16.3, 16.8 percentage points from last month, all of which were on the line of prosperity and decline. In terms of production, the indexes of large, medium and small enterprises were 55.3%, 53.5% and 5 1.6%, respectively, up by 27.0, 25.4 and 25.5 percentage points from last month. From the demand point of view, the new order index of large, medium and small enterprises was 53.2%, 5 1.4% and 49.7%, respectively, up by 23, 22. 1 and 22.9 percentage points from last month; The index of new export orders of large, medium and small enterprises was 47.3%, 44.2% and 46.3%, up by 17.8, 18. 1 and 15.3 percentage points respectively. From the perspective of business expectations, the production and business expectations of large, medium and small enterprises are 55.5%, 52.5% and 54%, respectively, up by 1 1.2, 12.5 and 16.6 percentage points from last month.

7. The recovery of service industry is weaker than that of manufacturing industry, and the recovery of construction industry is faster.

In March, the non-manufacturing business activity index was 52.3%, up 22.7 percentage points from the previous month; New orders and new export orders were 49.2% and 38.6%, respectively, up by 22.7% and 1 1.8 percentage points from last month, which was lower than that of threshold, reflecting that the reduction of new orders and new export orders in non-manufacturing industries slowed down from last month.

The recovery of service industry is weaker than that of manufacturing industry, and life-oriented service industry is more difficult. The business activity index of service industry was 5 1.8%, up 2 1.7 percentage points from last month. Among the 2 1 industries surveyed, except the securities industry, all other industries have rebounded to varying degrees. 1) The business activity index of transportation, retail, banking and other industries is relatively high. 2) The business activity index of life service industry is 50.2%, which is lower than the overall index of service industry 1.6 percentage points. Accommodation, catering, tourism, residents' service, culture, sports and entertainment industries are greatly affected by the epidemic. According to the investigation report of Meituan, as of March 9, 65.4% of the comprehensive merchants were in a state of suspension of business, only 34.6% of them were in normal business, and those who resumed business were in poor business condition, 74.5% of them had almost no transactions, and the turnover of1.5% of them was/in the same period of 20 19. Only 1.3% of the merchants' turnover was the same as that of 20 19, and 0.4% of the merchants' turnover exceeded that of 20 19.

The construction industry recovered quickly, reflecting the progress of returning to work and the expectation of infrastructure construction. The index of business activities and new orders in the construction industry was 55. 1% and 48.4%, respectively, up by 28.5 and 24.6 percentage points from last month. From the perspective of labor demand and market expectation, the index of employees in the construction industry and the expected index of business activities were 53. 1% and 59.9%, respectively, up 20.8% and 18. 1 percentage point from last month. The number of enterprises returning to work increased month-on-month, and their confidence recovered. 20 19 1 1 month 27, the Ministry of Finance issued the new special debt limit for some local governments in 2020 1 trillion yuan in advance. On February 1 1 2020, the Ministry of Finance issued a new limit of 848 billion yuan for local government debt. On March 27, 2020, Politburo meeting of the Chinese Communist Party mentioned "issuing special government bonds and special local government bonds", which will be mainly used for infrastructure construction and tax reduction. With the issuance of special bonds in place, the resumption of large-scale projects will accelerate, and the peak of infrastructure construction will be ushered in the second quarter.