China’s economy showed signs of stabilization last month, buoyed by the highest retail sales growth in eight months and indicating Beijing’s latest round of stimulus has boosted some key sectors.
Retail sales increased 4.8 percent from a year earlier, the Chinese National Bureau of Statistics said yesterday, up from September’s gain of 3.2 percent and beating the median forecast of 3.8 percent by economists in a Bloomberg survey. It marked the best reading since February.
Industrial output rose 5.3 percent from a year earlier, slightly slower than the previous month and lower than a forecast growth of 5.6 percent.
Photo: AFP
“With the accelerated implementation of the existing policies and the introduction of a raft of incremental policies in October, the national economy showed stable growth trend with major indicators recovering notably and positive factors accumulated,” the bureau said in a statement.
“However, we should be aware that the external environment is increasingly complicated and severe, effective demands are still weak at home and the foundation for continuous economic recovery needs to be strengthened,” the bureau added.
The indicators captured the immediate effects of China’s boldest stimulus measures since the COVID-19 pandemic that aimed to ensure the country reaches its annual growth target of about 5 percent.
A slowdown of economic expansion last quarter to the weakest since early last year has prompted policymakers to deliver outsized interest rate cuts and support for the property and stock markets. Authorities also rolled out a US$1.4 trillion debt swap program to curb debt risks faced by local authorities and free up fiscal room for them to promote growth.
The question now is how far Beijing is willing to go to shore up domestic demand and tackle deflation. Boosting consumption could become even more pressing after US president-elect Donald Trump’s victory at the polls, as he has threatened a 60 percent tariff on most Chinese imports, a move likely to hurt the Asian country’s export sector.
Data released previously for last month painted a mixed picture of the state of the world’s second-largest economy. Sentiment among manufacturers and service providers improved, and export growth hit a two-year high. However, inflation stayed near zero and credit expansion slowed more than expected, reflecting tepid domestic demand.
Chinese Minister of Finance Lan Foan (藍佛安) has promised “more forceful” fiscal policy next year, hinting at an increase in the budget deficit, an expansion in special local bond issuance and freer use of the funds raised. He also suggested greater support for a cash-for-clunkers program to spur consumer spending.
Governments at all levels accelerated bond sales in recent months, with net financing exceeding 1 trillion yuan (US$138 billion) for three straight months through last month.
That has yet to show an effect on investment, though. Fixed-asset investment increased 3.4 percent in the first 10 months of the year from the same period last year, maintaining the same pace from January to September.
Property investment fell 10.3 percent in the period, worsening from a slump of 10.1 percent in the first nine months, suggesting still-subdued confidence among developers despite an initial recovery in housing sales.
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