China’s economy likely remained weak as factories collapse
(Bloomberg) – China’s manufacturing activity likely remained subdued in November, as weak domestic demand in the economy outweighed any relief from easing energy shortages.
The official purchasing managers index for the manufacturing sector is expected to improve slightly to 49.7 from 49.2 in October when it was released on Tuesday, according to the median estimate of a Bloomberg survey of economists. This would be the third month it remains below the 50 mark, indicating a contraction in production.
The non-manufacturing gauge, which measures activity in the construction and service sectors, is expected to fall to 51.5 from 52.4 the previous month.
Energy shortages in China, which ravaged industrial production in September and October, likely eased this month as coal producers ramped up production and inventories rose. However, the housing market crisis shows no signs of ending and frequent Covid-19 outbreaks continue to dampen consumption.
âRestrictions on the supply side have improved slightly, so production has probably rebounded somewhat,â said Xing Zhaopeng, senior Chinese strategist at Australia & New Zealand Banking Group Ltd. But there is “not much of a positive signal from domestic demand”, which continued to weigh on business. , he said.
Economic growth is expected to slow to 5.3% next year, according to a Bloomberg survey median, with some economists seeing expansion as low as 4%. Bloomberg Economics is forecasting growth of 5.7%, as the government will likely target a 5-6% range.
What Bloomberg Economics Says …
âIn 2021, politics played a secondary role in defining the growth path. In 2022, it will be decisive. The extent of the slowdown will largely depend on how well China balances supporting short-term growth and pushing forward with long-term reforms.
â¦ We see the People’s Bank of China cut the interest rate on its one-year medium-term loan facility by 20 basis points and the reserve requirement ratio from 100 to 150 basis points by the end of 2022. .
– Chang Shu and David Qu
For rull’s report, click here
The authorities are trying to moderate the sharp decline in the real estate market, while providing targeted support to areas such as small businesses and green technologies. Officials will reveal more clues about the policy easing they plan to deliver at two key policy meetings in December by the Politburo and the Central Economic Work Conference.
China will adopt a more proactive macroeconomic policy next year to respond to the challenges of an uneven recovery in the global economy and instability in containing the pandemic, the Securities Times, led by the Daily, said on Monday. People, in a comment on the front page.
The authorities have shown restraint in the use of monetary and fiscal tools amid an economic slowdown this year, creating sufficient space for political maneuvering next year, according to the commentary.
The slowdown is being dampened by strong export demand, which likely remained strong in November, judging by the latest shipping figures from South Korea.
Consumption and travel continue to be affected by an upsurge in cases of the virus and the country’s growing determination to stick to its strict Covid Zero strategy. Passenger traffic on the subway in six major cities in China fell by less than 10% in November from October, although the drop was smaller than that of the August epidemic, according to Xing.
(Updates to the latest estimate in the second paragraph.)
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