Experts upbeat on recovery
Data points to uptick in nation’s factory, nonmanufacturing activity in January
China will likely see a faster economic recovery this year amid robust government measures to tackle challenges including insufficient domestic demand and the troubled real estate sector, with a run of indicators suggesting the stabilization of the world’s second-largest economy, according to experts.
In January, the country’s factory activity improved marginally while nonmanufacturing activities expanded at a faster pace, according to data released on Wednesday by the National Bureau of Statistics.
China’s official purchasing managers index for the manufacturing sector rose to 49.2 in January with a recovery in both demand and supply, compared with 49 in December, according to the NBS. Figures below 50 indicate a contraction in activity.
The subindex for production rose to 51.3 in January from 50.2 in December, while the gauge for new orders improved to 49 from 48.7 a month earlier, the NBS said.
NBS statistician Zhao Qinghe said that manufacturers’ optimism and confidence are stabilizing, with the gauge for manufacturers’ expectations for their production and operations standing at 54 in January.
China’s nonmanufacturing PMI came in at 50.7 in January, up from 50.4 a month earlier. Also, the country’s official composite PMI, which includes both manufacturing and nonmanufacturing activities, came in at 50.9 in January compared with 50.3 in December, according to the NBS.
Zhou Maohua, a macroeconomic researcher at China Everbright Bank, said, “The improvement in PMI readings reflects a faster pace of economic expansion, with the momentum in domestic demand strengthening.”
Zhou said that manufacturing PMI contracted for a fourth consecutive month in January as the month marks the off-season for some manufacturing sectors, pointing to the still-weak domestic demand. “Supportive macroeconomic policies are needed to bolster activity and promote the recovery in effective demand.”
The country has introduced a series of supportive policies since last year to bolster the economy, in terms of stimulating consumption, enhancing industrial capacities, reducing market entry barriers and strengthening financial services.
Lloyd Peng, president of CPA Australia’s North China Committee, emphasized the importance of policy support in driving economic growth, saying that these measures have “played a very positive and constructive role in alleviating the burden on businesses, boosting confidence, and stabilizing growth expectations”.
Data from the State Taxation Administration showed that the country’s newly implemented tax refunds, as well as tax and fee cuts and deferrals, exceeded 2.2 trillion yuan ($306.6 billion) in 2023, benefiting various sectors including manufacturing, small and medium-sized enterprises and private companies.
By the end of 2023, outstanding inclusive loans granted to small and micro businesses totaled 29.06 trillion yuan, up 23.27 percent year-on-year, according to the National Financial Regulatory Administration.
Peng said the Chinese economy experienced a steady recovery over the past year thanks to policy support and structural reform, and a new survey by CPA Australia indicates that this growth momentum is expected to continue this year.
“Despite global economic uncertainties, our survey reveals that 45 percent of professionals anticipate their company’s profits will increase this year,” he said.
Looking ahead, Peng said it is crucial that existing policies are implemented in a predictable and consistent way, which will ensure that such policies benefit more businesses.
“If larger companies in various industries can leverage these measures, it will assist them to inject new impetus into their business and increase support to smaller businesses in their value chain.”
On Tuesday, the International Monetary Fund released updates to its World Economic Outlook report, revising its 2024 global growth forecast to 3.1 percent, 0.2 percentage point higher than that in its projection in October. The updates reflected upgrades for China, the United States and large emerging markets and developing economies.
The IMF said that China’s growth in 2024 is forecast to reach 4.6 percent, 0.4 percentage point higher than its previous projection in October.
“Additional property sector-related reforms, including faster restructuring of insolvent property developers while protecting homebuyers’ interests, and larger-thanexpected fiscal support, could boost consumer confidence, bolster private demand, and generate positive cross-border growth spillovers,” the IMF said.