China Economic Analysis Report, No 50, May 2013

The macroeconomic index improved slightly over April, but remained low. Seen from the relationship between the synchronous index and quarterly GDP, economic growth in the second quarter will further slow, but the possibility of a sharp drop is small.

PPI may continue to decline in May with increasing negative growth margins that hinder company inventory cycles. Recently, financial market risks have increased with aggravating short-term market fluctuations. The serious overcapacity problem of the real economy must be properly adjusted to help the economy regain momentum.

The next question is how to guarantee that real economy adjustment gets effective financial support and how to prevent outbursts of systemic risks. Both are key to macroeconomic regulation and control.