China’s Strategic Transformation to “Expand Domestic Demand” is Inevitable
The concept of “enlarging domestic demand” has become the focus of heated discussions among the representatives of the “Two Sessions” in 2021. Yet it is also a strong signal released by the local Two Sessions at the beginning of this year.
Indeed, across the country the topic of “enlarging domestic demand” has been widely regarded as a key to China’s designs of a new “dual circulation” development pattern. One of the main tasks during the “14th Five-Year Plan” period is to build strong domestic markets and new development patterns.
At the same time, China will establish an effective system for expanding domestic demand, comprehensively promote consumption, expand investment, and accelerate the cultivation of a complete domestic demand system. Regardless of whether there is an anti-globalization trend, the COVID-19 pandemic, or the Sino-US trade disputes, China’s strategic transformation of “expanding domestic demand” is inevitable.
China’s New Economic Development Goal is Set at More Than 6%
On the morning of March 5, the latest Report on the Work of the Government was released at the Two Sessions of China. It set an economic growth target of more than 6%. This provides detailed guidance for the total monetary policy for this coming year.
It is worth noting that on the eve of the Two Sessions, there were questions of whether China had entered a period of “stagflation”. This clearly triggered rigorous debate. Some economists believe that China has entered stagflation because in February this year a number of indicators reflecting economic operations declined. Meanwhile, the price index was at a high level. Different voices pointed out that the current discussion on the issue of stagflation is of little significance. They believe that although the PMI declined in February, it was mainly affected by the Spring Festival holiday.
The stagflation discussion is still inconclusive. However, in response to rising inflation expectations, many scholars and industry insiders interviewed by Caijing reporters expect moderate imported inflation.
COVID-19 Vaccination in China is Heading on Quickly, But Far From Satisfactory
As of February 28, 2021, more than 52 million doses of the COVID-19 vaccines have been given to Chinese people.
More and more people have the opportunity to receive the vaccine. But they are always asking about the safety and effectiveness of the vaccine. In China, people can’t choose the brand of vaccine. They are asked to accept whichever product is available locally. Since people can choose whether to vaccinate or not, the price of this negative choice is that the progress of the vaccination effort is far from satisfactory. At present, 4 vaccines in China have obtained conditional approval from the authorities and have been successfully marketed. However, these vaccines still need to continue to complete phase III clinical trials before the trial data may be released.
Tesla is Having Setbacks in the Stock Market, But This is not the Only Challenge It Faces
The new energy vehicle stock boom that started last year has begun to cool down. And even Tesla, whose stock price has soared, has entered the “squeezing bubble” stage. On March 4, Eastern Time, Tesla’s stock price fell by more than 25%.
The turmoil in the stock market reflects that in the context of the continued improvement in the U.S. economic outlook, the market’s expectations for the Fed’s policy have changed significantly. Interest rate hikes are expected from this situation.
This is one of the reasons why high valuation stocks, including Tesla, are under pressure. It’s not just interest rates that affect Tesla’s stock price, it’s also linked to Bitcoin, which is known for its violent price fluctuations. On February 8, Tesla announced that it had invested $1.5 billion worth of Bitcoin. In addition, although Tesla is looking at a positive development pattern with continuous growth, it is not totally safe at all. Its biggest risk is the large-scale push of electric vehicles by traditional auto-makers to squeeze its market share.
