Indicators show improvements in China’s economy, says stats bureau

New figures from China’s National Bureau of Statistics (NBS) show the country’s economic recovery continued in July, despite continuing downward pressures on the global economy.

The NBS’ statistics showed that sales of consumer goods recorded a 7.3% increase from a year ago in the first seven months of 2023, and fixed-asset investment went up 3.4%.

The service sector’s production index gained 5.7% year-on-year in July, with industrial output jumping by 3.7%. And the urban unemployment rate fell slightly, registering a figure of 5.3%, compared with 5.4% a year earlier.

The Chinese economy continued the upward trend, with increases in both production and demand, stable employment and prices, and steady industrial upgrades, NBS spokesperson Fu Linghui said when releasing the stats.

The figures also show that consumption of services saw a big jump of 20.3% in the January-July period. High-tech investment gained 11.5% year-on-year in the first seven months, and the funds for scientific research and technologies went up 23.1%.

The NBS spokesman added: “Consumer price growth will gradually return to a reasonable level and the price decline at the factory gate will further narrow, propelled by the positive trajectory of the broader economy.”

Although economic indicators present a stable outlook, Fu emphasized the need for further efforts to “reinforce the foundation of China’s economic recovery amid a complex global environment and insufficient domestic demand”.

Given challenges at home and abroad, China has rolled out an array of pro-growth measures in the past months, the China Daily website reported.

It said: “A policy guideline was issued in July to address key concerns of private businesses, including fair competition and financing support. Consumer spending has been encouraged on a wide range of goods and services, including electric vehicles, home appliances, electronics, catering and tourism.”

Looking ahead, Fu expressed optimism over China’s economic outlook for the rest of the year, with the external environment likely improve and the country’s policies, such as measures to boost infrastructure construction, support the private economy and enhance foreign trade, will boost the internal driving forces.

“Despite pressures and challenges, we have many favourable conditions for the sustained economic recovery and high-quality development,” Fu said. “The economy will maintain stable performance in the second half with better development quality.”

And Su Jian, a professor at Peking University’s School of Economics, said the government’s recently announced measures to boost the private sector sent a clear signal that it is committed to promoting the healthy and sustained development of the private economy.

The academic said the “private sector serves as a vital force in advancing Chinese modernization and plays a key role in stabilizing economic growth, expanding employment and boosting technological innovation”.

Su said China’s enhanced supportive measures are key to boosting confidence and stabilizing the expectations of private enterprises and entrepreneurs, which will further consolidate the economic recovery trend.

 

Chinese interest rate cuts ‘will stimulate economy’

Meanwhile, the cut to benchmark interest rates by China’s central bank will stabilize growth and improve market confidence, according to industry experts, who added that more measures are likely to be introduced to stimulate the economy.

The People’s Bank of China (PBOC) has cut the rate on 401 billion yuan ($55.3 billion) worth of one-year medium-term lending facility from 2.65% to 2.5%.

This is the rate at which commercial and policy banks can borrow from the central bank using securities as collateral. The adjustment in this interest rate can help improve businesses’ access to funding.

These are the second such cuts to benchmark rates this year following a similar move in June.

Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, said that the sluggish property market and weaker consumption and investment data all meant the government needed to more intervention to stabilize growth.

The figures for July showed that the cost of credit for companies and households should be lowered, said Wang.

At the same time as the central bank moved to cut to the medium-term lending facility, the country’s National Bureau of Statistics (NBS) said the Consumer Price Index had contracted by 0.3% year-on-year in July.