Government attempts to boost economic growth
November 19, 2019 Category China News Round-up, Weekly
China’s economic growth remained “largely stable” in October, although downside pressure has continued to grow, the National Bureau of Statistics (NBS) said. Industrial output rose by 5.6% year-on-year in the January to October period, but in October alone, the indicator weakened to 4.7% from 5.8% in September. Retail sales grew by 7.2% in October, down from 7.8% in the previous month. Fixed-asset investment in the first 10 months rose by 5.2%, down by 0.2 percentage point from the January-September period. Fixed-asset investment (FAI) in high-tech industries expanded by 14.2% in the first 10 months, much higher than the overall investment growth, the NBS said.
Premier Li Keqiang underlined the importance of maintaining a stable macro-economic policy and better using countercyclical tools to make policies more effective and sustainable, and to boost market confidence. China’s GDP growth slowed to 6% year-on-year in the third quarter, the lowest quarterly expansion in 27 years. Manufacturing activity shrank for the sixth consecutive month in October, with the purchasing managers index (PMI) for manufacturing coming in at 49.3. The Premier said the economy is faced with mounting downward pressure, as the outside environment becomes even more challenging. Li vowed greater support for the real economy, especially for small and medium-sized enterprises (SMEs) and private businesses.
The People’s Bank of China (PBOC) said it would maintain a prudent monetary policy to prevent inflation from spreading. In its third-quarter monetary policy report, the central bank also said it was studying plans to switch the benchmark rate for existing loans to the new loan prime rate (LPR). China’s economic growth for the third quarter tumbled to its slowest pace in nearly three decades, under pressure from slowing global demand and the ongoing trade war between China and the United States. At the same time, China’s consumer inflation has quickened to a near eight-year high of 3.8%, driven in part by soaring pork prices as a result of an outbreak of African swine fever in the country. The introduction of the LPR – a lending benchmark for new bank loans to households and businesses – is part of a broader package of reforms the central bank is exploring to reduce corporate borrowing costs. The PBOC reiterated it would continue to significantly lower real interest rates through reforms. It said the weighted average lending rate fell four basis points in the third quarter to 5.62%.
Meanwhile, the National Development and Reform Commission (NDRC) and 14 other government agencies published a guideline to help deepen integration of advanced manufacturing and the modern services sector to increase the competitiveness of manufacturing, cultivate a modern services sector and achieve high-quality development. China is set to cultivate a group of leading enterprises, platforms and demonstration zones in innovation, quality and clout by 2025, the guideline said.
China’s non-financial outbound direct investment (ODI) posted steady growth in the first 10 months of the year to CNY621.78 billion, up 5.9% year-on-year, according to the Ministry of Commerce (MOFCOM). In October alone, China’s ODI soared 28% year-on-year to CNY66.95 billion. New home sales in China continued to accelerate in the first 10 months of this year, the National Bureau of Statistics said. Between January and October, about CNY10.89 trillion worth of new homes, excluding government-subsidized affordable housing, were sold around the country, an increase of 10.8% from the same period a year ago. By area, new homes sold climbed by 1.5% year-on-year to 1.17 billion square meters.
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