Relative to world economic chaos, has risen for the world’s second largest economy, “the scenery here is good,” China is also facing many problems. Regulation of prices, private lending crisis, RMB appreciation, tax reform, 10 million units of affordable housing by building, as well as high-speed rail and other construction projects in China in 2011 a shortage of funds into financial remarkable event.

Difficult economy facing severe challenges ahead

“Prices continue to run high in 2011 China’s economy is facing the biggest test.” This is the financial and securities of Wuhan University of Technology, Institute of Directors board new ideas.

10 months of 2011, China’s CPI growth rate has been high. Among them, pork prices in the CPI in July, driven by impulse to 6.5% of the peak year, to hikes in August before weakening in the next step by step down. In order to counter inflationary pressures, the central bank increased six times the first half of the deposit reserve ratio, up to 21.5% of the historical peak, but since then has continued to increase CPI hit a new high. To November, CPI rise was down significantly to 4.2%, while the one-year yuan deposit rate was only 3.5%, resulting in a lot of money to escape negative interest rates savings bank, as much over the past 11 months, three months residents’ deposits appeared less Some negative growth, the residents fled deposits also the breeding ground for the proliferation of private lending.

Wenzhou usury crisis, making the private lending crisis in the financial field in 2011 has become a remarkable event. Side is the cheap money the banking system, on the other side is outside the banking system, a variety of disguised usury. Deposits of negative interest rates, cost of capital “dual system” and other investment channels for a single reason together, a direct result of a dangerous asset bubbles. For example, Jiangsu Sihong “BMW,” and the national lending eventually turned into a “national debt collection”, Wenzhou some bosses can not settle loan sharks and “on foot”, and even some bank loans and disguised by the Trust in trust management, etc. lending game .

RMB appreciation, tax reform and local debt in 2011 financial crisis is also noteworthy event.

Although the spot exchange rate of the RMB continuous trigger limit, but still a long period since 2005, the appreciation of the channel. In early November of this year, the RMB exchange rate against the U.S. dollar hit a record 6.31 yuan. The currency appreciation to reduce China’s export competitiveness, labor-intensive, low value-added features of China’s export enterprises for the tough days. 2011 year on year growth rate of China’s Customs month exports dropped significantly compared with 2010, foreign exchange surplus declined significantly even since the emergence of 46 months of negative growth.

In 2011, the National People’s Congress voted to adopt a personal income tax law on amending the decision to the tax threshold to 3,500 yuan. After adjusting for the number of working-class taxpayers from the 84 million people reduced to 24 million. The reform of the tax cuts far more than the previous adjustment.

Local debt precarious platform, has become a concern in 2011 a hot topic. No matter how local governments ‘land’, is still not enough money to spend. According to data released by the National Audit Office, as of the end of 2010, the national local government debt balances 10.717491 trillion yuan, of which the government bears the responsibility to repay the debt accounted for 62.62%; government bears responsibility for or guarantees the debt accounted for 21.80%; government may bear some responsibility for other debt relief accounted for 15.58%. Which in 2011, the debt due for repayment in 2012 accounted for 24.49%, 17.17%. Sources from the borrower to see the end of 2010 the balance in local government debt, bank loans of about 8.5 trillion yuan, accounting for 79%.

“High mid-term local debt to become the largest of China’s economic systemic risk.” CIC Securities told China Daily reporter XING slightly.

“Vigorously promote the protection of housing construction is most proud of the Chinese government in 2011.” China Daily reporter found that the previous real estate, housing the slightest signs of decline, the Government will relax. The reason is that real estate is not only an important source of local revenue, and more than 40 contacts with the upstream and downstream industries, real estate, a decline in these industries will be affected, thus affecting employment. And this despite the volume of commercial housing price or the emergence of the phenomenon, but the government still insists on control means does not relax, the reason is that the Government in 2011 to protect 10 million units of housing starts. Obviously the government is to protect the room with the decline in real estate to offset the incremental impact on the economy. However, the protection of housing and high-speed rail funds are insufficient to offset some of the GDP.

Expansion of domestic demand careful control while maintaining stability

“Maintaining stability”, which is the just-concluded Central Economic Work Conference set the overall tone of economic work in 2012.

According to experts, the interpretation of the so-called “stability” is to maintain a stable macroeconomic policies to maintain stable and rapid economic development and maintain the basic stability of general price level, maintaining overall social stability. The so-called “progress” is to continue to seize and important strategic opportunities for China’s development period,

Changes in the way of economic development in the new progress made in deepening reform and opening up new breakthroughs in improving the livelihood of the people to achieve new results. The “progress”, the central emphasis is to speed up structural adjustment and economic restructuring; “progress” is the core of expanding domestic demand, and effectively improve the proportion of final consumption in the national economy.

Some analysts believe that the current economic structure is an important issue is the lack of consumer demand, economic growth, over-reliance on investment and export demand. Last year, China’s investment rate rose to a record level of 48.6% over the previous year and increased 1.1 percentage points, and the final consumption rate for the first time less than the investment rate, only 47 percent. This means that last year we have produced nearly half is used to expand production, the people spending even less than the investment, this structure is extremely distorted in the state, is not sustainable.

Stimulating economic growth in the troika, because of weak growth in Europe and America led China’s exports will fall, long-term support for high growth in China’s foreign trade, the future role in boosting the economy will weaken, China’s economic growth eventually will rely on domestic demand.

“Domestic demand including consumption and investment spending in China has great potential for the Central that” maintaining stability “, the most reliable way to increase consumption, because consumption growth is different from the investment of the biggest advantage is stable. Investment may fluctuate wildly, if the consumer really inspire them, then you can maintain a stable long-term economic growth. “State Council Development Research Center, deputy director of finance Ba case to answer media questions.

The expansion of consumption, tax cuts next year will play a relatively good results. Reduce the tax burden of SMEs and residents, can provide some support for the consumer. In addition, China may develop consumer credit, and cultivate new consumption hot spots and other ways to expand the population of final consumption. Culture, leisure, automotive and other consumer market still has much room for growth, in reasonable control of the premise, the housing needs of the residents should also be better met.

Experts believe that next year may be appropriate to expand the scale of fiscal expenditure, on this basis should increase investment in the field of livelihood, put more emphasis on the effect of people’s livelihood. Spending on the people’s livelihood, on the one hand to pay more attention to the effect, such as education spending, but should be considered to be fair, emphasis on rural, migrant workers’ children’s school; the other hand, attention must also be sustainable, taking into account our country’s future will be entered aging society.

“Only the size of people’s livelihood and benefits of investing to improve, and increase the income of residents, reducing the burden on the people of the community, enhance their sense of stability for the future, the expansion of consumption in order to have a foundation.”