China’s economy picked up in December, indicators show
Beijing, China - China’s economic performance improved in December for the first time in eight months, according to a group of earliest-available indicators compiled by Bloomberg.
Production in the world’s second-largest economy accelerated as domestic demand stabilised, and market sentiment turned around on the prospect of a trade deal with the US.
The reading is the latest sign that Chinese economy is at or close to a cyclical bottom after activity improved in November on a global demand rebound. While accepting that output is on a longer-term slowing trend, policy makers have sought to prevent a sharp deceleration into 2020 through a wide-range of measures to support consumption, labour mobility and the private sector.
That’s led some economists to upgrade their growth forecasts for 2020, currently seen just edging below 6 per cent. Profits at Chinese industrial enterprises rebounded in November, data released on Friday showed, as factory-gate deflation eased and domestic demand improved.
“The reading signals a brighter beginning for the coming new year. We expect that strength to extend in coming months, but the sustainability of the improvement in the longer term is still in question - as we expect the economy to continue to slow next year,” Qian Wan, economist at Bloomberg Economics in Hong Kong, said.
Still, gauges of the manufacturing sector in the US, euro area and Japan moderated in December after a strong recovery in the previous month, likely weighing on China’s exports. The National Bureau of Statistics on Friday warned that downward economic pressure was still lingering, and that ‘volatility and uncertainty’ remain. Quickening production is evident in surging copper prices, which jumped to eight-month high, as well as in rising stocks. Exports from South Korea - whose largest trading partner is China - remained in contraction in the first 20 days of the month, though the decline has narrowed.
A gauge of small businesses by Standard Chartered Plc rose to the highest since April, suggesting increasing optimism among private and export-oriented firms. The US is expected to lift some of the tariffs imposed on Chinese goods after the phase-one deal is signed, potentially early next month.
The decline in a Bloomberg tracker of producer prices started to narrow after months of deepening contraction, indicating factory-gate prices could resume gaining in coming months to help lift the nominal growth of the economy.