សេដ្ឋកិច្ច​របស់​ប្រទេស​ចិន​កំពុង​តែ​ដកដង្ហើម​មិន​ឈប់

Growth has slowed to 4.9 per cent and housing market confidence has been hit hard by the Evergrande crisis, but the economy will speed up again as the global recovery gathers pace

Beijing’s growth target is within reach, but the economy will rely on export drivers for now at least

There’s a general feeling that China’s economy is slowing, but it’s nothing to get too worried about. China’s recovery is just taking a breather from the breakneck pace of economic expansion seen at the start of the year as the mainland bounced back from the Covid-19 crisis.

Growth has slowed to 4.9 per cent and housing market confidence has been hit hard by the Evergrande crisis, but the economy will speed up again as the global recovery gathers momentum.

Beijing’s 2021 target of above 6 per cent growth is easily within reach, but the economy will be relying on its traditional external drivers, with export-led recovery taking the lead until domestic demand can take up the slack.

Consumer and business confidence may look muted, but there is no need for a major policy push. Monetary and fiscal policy settings are probably about right and future growth trends should settle into a 5-to-6-per-cent track over the next few years.

Restoring stability is key for China after the shock of the pandemic and it is going to take some time before the economy settles back into a more normal growth pattern. Economic growth of 18.3 per cent year on year in the first quarter of this year was clearly unsustainable in terms of output capacity and price constraints.

The subsequent slowdown to a more moderate rate, averaging 6.4 per cent over the past two quarters, must be a relief for policymakers as it comes closer to Beijing’s target for the year.

The last thing the government needs is the risk of demand-pull inflation while supply-side price pressures sweep the economy. With annual producer price rises hitting 10.7 per cent in September, Beijing is fortunate that consumer price inflation is running as low as 0.7 per cent for the time being.

China is also fortunate that it can tap into the recovery spreading across the global economy as the world catches up on the backlog of supply-chain shortages. With global trade volumes currently running around 11 per cent higher than a year ago, it’s no surprise that China is enjoying strong demand for its exports as the world replenishes its depleted stocks of consumer items, investment goods and industrial raw materials.

Exports from China grew 27.1 per cent year on year, to US$300.22 billion, in October, after a 28.1 per cent surge in September, marking the 13th straight month of double-digit growth in shipments. There are no signs of China’s stellar export boom slowing down.

Clearly, China is at the forefront of the bounce-back in global business conditions as the world’s premier manufacturing powerhouse, but other major exporting nations are also cashing in.

In Europe, German engineering orders surged 65 per cent year on year in September, boosted by foreign orders which have nearly doubled over the past year, with the annual growth rate reaching 98 per cent.

As the pandemic eases and global business confidence gathers more momentum, it’s all good news for China and Germany’s export sectors, with huge spin-offs for their domestic economies. For the world’s two biggest trade-surplus economies, export-led recovery is paying major dividends.

US growth slumped to 2 per cent in the third quarter due to supply-side constraints but the economy is already showing signs of stronger activity. The fourth quarter has started well, with US non-farm payrolls roaring back by over a half million jobs in October and wages up 4.9 per cent from a year ago.

This underlines that US consumer demand will be sucking in imports from China at a faster rate in future. But, until a landmark trade deal is struck between the two countries, it risks further widening the US-China trade deficit.

China may be transitioning to stronger domestic-led growth under its dual circulation strategy, but it will need to be patient and wait for consumer and business confidence to find a firmer footing.

Cumulative government spending in the first eight months of the year is running 3.6 per cent higher than a year ago, while broad M2 money supply growth rose to 8.3 per cent in the year to September.

This should be more than enough to keep the economy on an even keel and ensure growth stabilises to around the 6 per cent mark for the foreseeable future.

SCMP