Steady growth ex­pected, de­spite pres­sure

China Daily European Weekly - - Business - Con­tact the writ­ers at [email protected]­nadaily.com.cn

In­no­va­tion, tech­nol­ogy are bright spots for China, show­ing an in­crease of 11.8 per­cent year-on-year

of this year has laid a rel­a­tively sound foun­da­tion for 2019,” Mao said.

The com­ments came af­ter China’s re­tail sales growth weak­ened to 8.1 per­cent year-on-year in Novem­ber, down from 8.6 per­cent in Oc­to­ber. Mao at­trib­uted the de­cline to slump­ing au­to­mo­bile con­sump­tion as well as lower gaso­line and diesel prices.

“This year has seen fluc­tu­a­tions in re­tail sales, but China boasts the world’s largest group of mid­dle-in­come con­sumers and still has big po­ten­tial for con­sump­tion,” Mao said.

China has re­leased a string of poli­cies, such as rais­ing the thresh­old for per­sonal in­come tax, to re­duce the fi­nan­cial bur­den on in­di­vid­u­als to help un­leash con­sumers’ pur­chas­ing power and shore up con­sump­tion next year, he added.

In Novem­ber, China’s in­dus­trial out­put, an im­por­tant eco­nomic in­di­ca­tor, ex­panded 5.4 per­cent year-onyear, 0.5 per­cent­age points be­low Oc­to­ber’s fig­ure.

But as the na­tion strives for growth led by in­no­va­tion and tech­no­log­i­cal ad­vance­ments, its high-tech man­u­fac­tur­ing out­put ex­panded by 11.8 per­cent year-on-year from Jan­uary to Novem­ber, out­do­ing over­all in­dus­trial out­put growth.

An­a­lysts ex­pect that with the coun­try vow­ing to give more pol­icy sup­port to boost the econ­omy, fixed-as­set in­vest­ment and pri­vate sec­tor in­vest­ment will pick up, and that, in turn, will play a ma­jor role in help­ing the econ­omy through the dif­fi­cult times.

The pace of China’s fixed-as­set in­vest­ment has picked up for a third straight month. In the first 11 months of this year, China’s fixed-as­set in­vest­ment climbed 5.9 per­cent year-onyear, quick­en­ing from the 5.7 per­cent growth in the Jan­uary-Oc­to­ber pe­riod.

Pri­vate in­vest­ment, which ac­counted for more than 60 per­cent of to­tal fixed-as­set in­vest­ment, ex­panded by 8.7 per­cent. Man­u­fac­tur­ing in­vest­ment also grew at 9.5 per­cent, 0.4 per­cent­age points higher than in Oc­to­ber.

“We be­lieve this set of data will put pol­i­cy­mak­ers un­der more pres­sure to loosen mone­tary poli­cies fur­ther. For the rest of the year, this is likely to in­volve a mix­ture of ac­tions,” said Song Yu, chief econ­o­mist at Gold­man Sachs.

Poli­cies in the pipe­line could in­clude tax re­duc­tions and pos­si­ble tax breaks to en­cour­age con­sump­tion, Song added.

Wang Jun, chief econ­o­mist at Zhongyuan Bank in Bei­jing, also said the need for cut­ting taxes, fees and in­ter­est rates has fur­ther in­creased.

In the face of emerg­ing eco­nomic chal­lenges at home and abroad, China has stepped up ef­forts to sta­bi­lize in­vest­ment, in­clud­ing rolling out mea­sures to mo­ti­vate pri­vate in­vestors and chan­nel funds into in­fra­struc­ture.

Qu Xian­ming, an ex­pert with the Na­tional Man­u­fac­tur­ing Strat­egy Ad­vi­sory Com­mit­tee, said with the cen­tral gov­ern­ment’s mea­sures tak­ing ef­fect, in­vest­ment is likely to re­main stable or even regis­ter faster growth next year.

It is im­por­tant to put these eco­nomic data in the con­text of com­pli­cated global en­vi­ron­ments and not look at them in iso­la­tion, Qu said.

“Although we are fac­ing cool­ing global eco­nomic growth and fluc­tu­a­tions in com­mod­ity prices, China’s econ­omy is run­ning within a rea­son­able range,” he said.

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