China Economy Picks Up on Stimulus Push Ahead of US Election

BLOOMBERG |
Published October 31, 2024
  • Stimulus defies seasonal pressure to boost growth momentum
  • Still-weak new export orders weigh on manufacturing sector

China’s economy showed signs of stabilizing after Beijing unleashed the boldest stimulus measures since the pandemic, although an upcoming US election injects uncertainty into the recovery.

Factory activity unexpectedly expanded in October after five months of contraction, the National Bureau of Statistics said Thursday. The official manufacturing purchasing managers’ index rose to 50.1, higher than a forecast of 49.9 by economists. The non-manufacturing PMI showed activity in construction and services expanded after staying little changed the previous month.

“It’s positive that the PMI beat and there were some signs of a turnaround, but at the end of the day we’re still in the shadow of the US elections which remain a key wild card for the China growth outlook,” said Eddie Cheung, senior emerging markets strategist at Credit Agricole CIB.

Chinese stocks swung between gains and losses on Thursday morning, with the benchmark CSI 300 Index rising as much as 0.9% after losing 0.8% earlier. The offshore yuan was little changed and China’s 10-year government bond yields kept steady at 2.16%.

The PMI surveys provided the first official economic indicators for the month after China made forceful cuts to interest rates and unveiled measures to bolster the housing market in late September. The uptick in activity defied the drag from fewer working days in October as a result of a weeklong public holiday.

 

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SOURCE: www.bloomberg.com

RELATED: Low consumer spending in China hinders economy there and abroad


A worker uses a cell phone outside a construction site in Beijing on October 31, 2024.
VOA |
Published October 31, 2024

U.S. Treasury Secretary Janet Yellen has joined several independent economists to express her frustration about low consumer spending and the property crisis in China. Some experts have expressed disappointment over Beijing’s limited measures to stimulate consumer spending, which is one of the biggest hurdles in the Chinese economy.

“Our view has been that raising consumer spending in China as a share of GDP (gross domestic product) is really important, along with measures to address problems in the property sector,” Yellen said recently. “So far, I would say, I haven’t really heard any policies on the Chinese side that address that.”

Yellen has criticized China for its focus on subsidizing large state-owned companies instead of working to revive the wider economy, the world’s second largest. Analysts have suggested that China should stop subsidizing manufacturing companies with the money of households.

The World Bank has predicted that China’s GDP growth will be 4.8% this year, short of the country’s 5% goal. It will slip further to 4.3% in 2025, the bank predicted.

Low consumer demand in China can bring down the rate of growth in the global economy and affect the prospects of businesses in the U.S. and other parts of the world.

“For U.S. companies like Apple, Nike, Microsoft, KFC, Starbucks, Coca-Cola, Tesla or General Motors, to name a few, China is a big market. Any increase or decrease in consumption in China can influence their bottom line,” Lourdes Casanova, director at Cornell University’s Emerging Markets Institute, told VOA.

 

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SOURCE: www.voanews.com