2023-12-19 06:24:47
China’s central bank injected a net 800 billion yuan ($112 billion) into the financial system on Friday, the largest injection of liquidity on record through one-year loans to banks, a sign of the government’s commitment to Worried about the fragile economic recovery.
Data released on Friday further showed that China’s economy is once again struggling after recovering in the third quarter. Previous data showed imports falling sharply, manufacturing activity contracting, service sector activity slowing and deflation intensifying.
“Today’s data suggests that a series of supportive measures have not been successful in translating into near-term growth amid weak business confidence,” said Bruce Pang, chief China economist at Jones Lang Lasalle.
There is no sign that Chinese policymakers are considering a large stimulus package or following the example of some Western governments in sending cash to households. At the Chinese Communist Party’s annual economic policy-making meeting last week, senior leaders including Xi Jinping provided few details of the plan, promising only to step up fiscal and monetary policy support next year.
Many data released on Friday showed that China’s economy grew year-on-year in November, but economists cautioned that the same period last year coincided with China’s economy being hit by strict anti-epidemic measures, which makes this November’s data Looks better.
Total retail sales of consumer goods increased by 10.1% year-on-year in November, lower than the 12.9% growth expected by economists surveyed by The Wall Street Journal. But it was still higher than October’s 7.6% growth rate. The data is a key indicator of domestic consumption.
Yao Wei, chief China economist at Société Générale, said the real concern about the Chinese economy remains insufficient demand, especially from households. He also said that total retail sales of consumer goods were the most disappointing among the data released last Friday.
Fixed asset investment rose 2.9% from January to November, the same pace as in the first 10 months of this year. Economists had expected fixed asset investment to grow by 3% year-on-year. Private investment fell by 0.5% year-on-year in the first 11 months of this year. Most jobs in China’s urban areas are provided by private enterprises.
The official urban unemployment rate remained at 5% in November, but economists and analysts have questioned the reliability of the data.
The biggest bright spot of China’s economy may be its manufacturing industry. The growth rate of industrial added value above designated size rose to 6.6% in November, which was higher than economists’ predictions and higher than October’s 4.6%.
“The underlying momentum has slowed a bit,” said Larry Hu, chief China economist at Macquarie, adding that weakness in the property sector remained the biggest drag on economic growth.
Earlier this year, the Chinese government introduced stimulus measures including cutting interest rates, extending corporate tax incentives and lowering mortgage costs for homebuyers. But economists believe that these measures are too cautious given the headwinds facing the economy and have failed to maintain a robust economic recovery after the epidemic.
The Chinese government’s efforts to stem a long-running real estate slump have had little success. The average price of newly built residential properties in China fell by 0.70% year-on-year in November, after falling by 0.58% in October. Real estate development investment and residential sales both declined further in November.
The World Bank now expects China’s economic growth to slow to 4.5% next year from 5.2% in 2023, according to a report released this week, citing a weakening property sector, sluggish global demand and factors including high debt levels and… Structural disadvantages, including population aging, pose “significant risks”.
The turbulent performance of the Chinese economy stands in sharp contrast to the unexpected resilience of the U.S. economy; the Federal Reserve’s sharp interest rate hikes have not curbed spending by the U.S. consumer and business sectors.
Many economists expect China to announce an official economic growth target of around 5% next year, consistent with this year’s target.
“If that’s the case, more needs to be done, and quickly, especially in real estate,” said Societe Generale’s Wei Yao and Michelle Lam, who is also an economist at the bank.
Wang Tao, chief China economist at UBS, expects it to be “very challenging” for China to achieve such economic growth because of the continued headwinds the country faces and the relatively weak policy support stance hinted at this year’s Central Economic Work Conference. restraint. She expects China’s GDP growth to slow to 4.4% next year.
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