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Fixed-asset investment spurs China's recovery
By Wang Yanlin |
November 6, 2012, Tuesday
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CHINA'S economic data for October may provide further evidence of a mild recovery taking shape in the world's second-largest economy, analysts said before the data's release on Friday.
Investment in infrastructure, transportation in particular, should remain a driving force to bolster the performance, along with the improved retail sales thanks to the eight-day National Day holiday in early October.
"China's worst slump since the global financial crisis in 2008 may have leveled out," said Yao Wei, China economist at Societe Generale. "Nearly all economic indicators are likely to look better in October and inflation will ease further to allow earlier easing policies to filter through."
Yao expected fixed-asset investment will expand 20.6 percent on an annual basis in the January-October period, up from the 20.5 percent rise in the first three quarters. Retail sales may increase 14.5 percent, compared with 14.2 percent in September.
Lu Zhengwei, chief economist at Industrial Bank, was a bit less optimistic but was also upbeat about the recovery.
"It's safe to say the worst time of this round of economic downturn has passed," Lu said, adding the country's fixed-asset investment will increase 20.3 percent in October and retail sales may gain 13.7 percent.
In the past two months, the National Development and Reform Commission has approved a batch of new projects, including 25 metro lines and 24 airports -- either new projects or expansion projects involving 900 billion yuan (US$144 billion).
"Although cold weather may delay some projects, the performance of their suppliers can still be boosted by an increase in new orders," Lu said.
There have been some signs already. The official Purchasing Managers' Index, which measures operating conditions at mainly state-owned industrial enterprises, returned to 50.2 in October, up from 49.8 in September and 49.2 in August. It was the first expansion in three months.
The non-manufacturing PMI, a gauge of performance in service companies, rose 1.8 points from a month earlier to 55.5 in October.
Tang Jianwei, an analyst at the Bank of Communications, said inflation growth will remain low in October to allow continued policy easing.
Tang estimated the consumer price index will advance 1.9 percent in October, same as in September.
Exports may stabilize after September's strong rebound of 9.9 percent, expanding 9 percent, while imports may grow 3 percent, from 2.4 percent in September, analysts said.
Investment in infrastructure, transportation in particular, should remain a driving force to bolster the performance, along with the improved retail sales thanks to the eight-day National Day holiday in early October.
"China's worst slump since the global financial crisis in 2008 may have leveled out," said Yao Wei, China economist at Societe Generale. "Nearly all economic indicators are likely to look better in October and inflation will ease further to allow earlier easing policies to filter through."
Yao expected fixed-asset investment will expand 20.6 percent on an annual basis in the January-October period, up from the 20.5 percent rise in the first three quarters. Retail sales may increase 14.5 percent, compared with 14.2 percent in September.
Lu Zhengwei, chief economist at Industrial Bank, was a bit less optimistic but was also upbeat about the recovery.
"It's safe to say the worst time of this round of economic downturn has passed," Lu said, adding the country's fixed-asset investment will increase 20.3 percent in October and retail sales may gain 13.7 percent.
In the past two months, the National Development and Reform Commission has approved a batch of new projects, including 25 metro lines and 24 airports -- either new projects or expansion projects involving 900 billion yuan (US$144 billion).
"Although cold weather may delay some projects, the performance of their suppliers can still be boosted by an increase in new orders," Lu said.
There have been some signs already. The official Purchasing Managers' Index, which measures operating conditions at mainly state-owned industrial enterprises, returned to 50.2 in October, up from 49.8 in September and 49.2 in August. It was the first expansion in three months.
The non-manufacturing PMI, a gauge of performance in service companies, rose 1.8 points from a month earlier to 55.5 in October.
Tang Jianwei, an analyst at the Bank of Communications, said inflation growth will remain low in October to allow continued policy easing.
Tang estimated the consumer price index will advance 1.9 percent in October, same as in September.
Exports may stabilize after September's strong rebound of 9.9 percent, expanding 9 percent, while imports may grow 3 percent, from 2.4 percent in September, analysts said.
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