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China may see firming economy in August
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China’s economic performance in August is expected to be better than July’s, bolstered by infrastructure investment, the stimulus package unveiled in the second half of last year as well as recent supportive measures, analysts said.
China’s August economic data, due to be released next week, are likely to be better than expected, Zhu Haibin, chief economist for China at JP Morgan, said. He added that the data will ease concerns about a further slowdown in economic activity.
“The improvement in economic outlook is driven by more infrastructure investment and the mini-stimulus package observed in the second half of last year as well as the recent supportive measures, which are more targeted and selective than the 2008 stimulus package,” Zhu said.
Supportive measures include tax cut for small companies, more investment in railway and other infrastructure construction as well as less red tape for exporters.
Lu Zhengwei, chief economist at the Industrial Bank, projects the Consumer Price Index, the main gauge of inflation, to dip slightly to 2.6 percent from the increase of 2.7 percent in both July and June which was a four-month high.
Lu also forecast a quicker expansion in retail sales and fixed-asset investment although the growth in industrial production may remain flat.
July’s trade may stabilize with both exports and imports moderating a bit, he added.
“The (pending) data will provide more evidence of a strengthening economy,” Lu said.
Meanwhile the official Purchasing Managers’ Index, a comprehensive gauge of operating conditions in China’s industrial companies, rose to 51 points last month, a 16-month high that indicated growth momentum was accelerating in the world’s second-largest economy.
JPMorgan has revised its projection for third-quarter growth to 7.6 percent year on year, bringing the whole year estimate to 7.6 percent, up from 7.4 percent previously.
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