Chinese economy rebounding coincide Stats Office and IMF; Beijing pumping a US$ 138bn support — MercoPress
Chinese economy rebounding coincide Stats Office and IMF; Beijing pumping a US$ 138bn support
The upgrade reflects a first quarter GDP growth stronger than expected, and some additional policy measures recently announced,” Deputy Managing Director Gita Gopinath said
The Chinese economy rebounding, seems to be the message both from the country’s National Bureau of Statistics, NBS, and even the IMF with a more optimistic outlook. According to NBS industrial profits during April were again in positive territory and so are other important economic indicators, which showed a moderate improvement from March, highlighting a sustained recovery of the world’s second-largest economy.
Analysts said that the Chinese economy will gain pace in the second quarter, with GDP expected to grow about 5.5%, an increase from 5.3% in the first quarter, as stimulus measures kick in, particularly in the depressed housing and real estate markets.
In April, profits of industrial enterprises above the designated size rose 4% year-on-year, a significant improvement from the 3.5% decline in March, as pro-growth policies took effect and market demand picked up, Yu Weining, an official from the NBS, said on Monday.
From January to April, more than 70% of all industries’ profits rose year-on-year added Yu. The improvement of industrial profits in April reflects the recovery of market demand, macro policy support and the low base effect, Zhou Maohua, an economist at China Everbright Bank, said on Monday.
Supportive macro policies to reduce burdens on the manufacturing industry and promote industry upgrading contributed to the overall improvement of the manufacturing sector, Zhou underlined.
At the same time IMF’s First Deputy Managing Director Gita Gopinath speaking in Beijing anticipated that the Chinese economy is set to grow 5% this year, after a strong first quarter, upgrading its earlier forecast of 4.6% expansion though it expects slower growth in the years ahead.
IMF new projections come as Beijing steps up efforts to shore up an uneven recovery in the world’s second-biggest economy, which has stumbled in the face of a protracted property crisis and its ripple effects across investors, consumers and businesses.
The IMF said it had revised up both its 2024 and 2025 GDP targets by 0.4 percentage points but warned that growth in China would slow to 3.3% by 2029 due to an ageing population and slower expansion in productivity.
It now expects China’s economy to grow 5% in 2024 and to slow to 4.5% in 2025.
The upgrade that we have for this year mainly reflects the fact that first quarter GDP growth came in stronger than expected, and there were some additional policy measures that were recently announced, Deputy Managing Director Gita Gopinath pointed out
The IMF’s upgrade for 2024 is in line with Beijing’s growth target of around 5%, which the economy appears to be on track to reach after it blew past expectations to post growth of 5.3% in the first quarter. But deflationary pressures continue to loom large and a protracted property crisis remains a major drag on growth.
Lian Ping, president of the China Chief Economist Forum said that second-quarter GDP growth will be about 5.5% and full-year growth will hit about 5.3%, due to the more proactive macro policies.
Fiscal policy support is moving in the right direction and is positive, including the issuance of 1 trillion yuan (US$ 138 billion) in ultra-long special treasury bonds and increasing support for real estate, Lian said.
China on Friday issued this year’s second batch of these bonds totaling 40 billion Yuan with an interest rate of 2.49%. The reserve requirement ratio may be reduced further, along with lower market interest rates in the second quarter, Lian added.
