China is seeing an economic boost now that the support policy is taking effect

A consumer from Poland talks to a store owner about purchasing Christmas products in Yiwu, east China’s Zhejiang province, on July 9, 2024. Yiwu is the world’s largest supplier of global Christmas products. Since summer is the peak shipping season, a wide range of products are shipped after foreign merchants place their orders. Photo: VCG

China reported improving economic data for October after a series of existing and new support measures came into effect. Chinese officials and analysts said that as more of these policies are implemented, economic recovery and growth will be further consolidated.

Key economic indicators in consumption, services and trade showed marked improvement, while employment and prices remained stable and social expectations continued to improve, Fu Linghui, spokesman for the National Bureau of Statistics (NBS), said. Friday at a news conference.

Fu said the high-quality development made solid progress and gathered positive factors that supported steady economic progress and recovery. He also cited the complicated international environment, continued weakness in domestic demand and a number of companies still facing difficulties.

China’s value-added industrial production, a key economic indicator, rose 5.3 percent year on year in October, down slightly by 0.1 percentage point from September, NBS data showed.

China’s retail sales of consumer goods rose 4.8 percent year-on-year to 4.54 trillion yuan ($628.07 billion) in October, 1.6 percentage points higher than in September, NBS said.

Fixed asset investment rose 3.4 percent year-on-year in the first ten months of 2024, maintaining the same growth rate as in the January-September period.

More economic revivals

In September, China intensified its support policy with targeted stimulus measures to stabilize economic activity as the country strives to achieve its key annual economic and social development targets. The efforts include significant interest rate cuts and measures to stabilize the real estate and capital markets.

“October is the first month since the implementation of this step-by-step policy, and we are seeing the first results, with key economic indicators clearly recovering. In particular, areas related to key national strategies, strengthening security in key sectors, large-scale equipment upgrades and the replacement of consumer goods showed significant improvement,” Fu said, noting that sales of automobiles, household appliances and office supplies increased significantly, while infrastructure investments in water conservation, ecological protection and roads steadily recovered.

The NBS data showed that output in equipment manufacturing and high-tech manufacturing saw strong growth in October. Production of new energy vehicles (NEVs) rose 48.6 percent year-on-year, while production of industrial robots rose 33.4 percent, and integrated circuits rose 11.8 percent.

The Services Production Index rose by 6.3 percent year on year in October, 1.2 percentage points higher than that of September.

The implementation of major projects resulted in a 4.3 percent increase in infrastructure investment in the January-October period, 0.2 percentage points higher than in the January-September period, and marked the first recovery in recent months, it said Fu.

Zhou Maohua, an economist at China Everbright Bank, told the Global Times on Friday that while industrial production grew at a slightly slower pace than in September, it continued to show structural improvement, with the high-tech and equipment manufacturing sectors posting robust growth showed.

“A combination of supportive policies and the generally high consumption season in October led to better-than-expected retail sales growth, with strong auto sales and signs of stabilization in the real estate sector,” Zhou said. He predicted that momentum in the consumption recovery would continue as real estate and capital markets recover in the remaining months of the year.

October’s figures came after the release of other economic indicators pointing to a recovery in the economy. China’s manufacturing purchasing managers’ index (PMI), which measures activity in the sector, rose to 50.1 in October, marking a return to expansion territory after five months of contraction.

In October, the country’s merchandise trade grew by 4.6 percent year-on-year in yuan terms, up 3.9 percentage points from September, the General Administration of Customs announced on November 7.

More support to come

The Chinese economy has seen a number of recovering trends in recent weeks, with several milestones for industrial production and trade.

On Friday, the country saw the total number of freight train journeys between China and Europe surpass 100,000, bringing the total value of goods transported through the land trade route to $420 billion.

Production of the country’s 10 millionth NEV was completed on Thursday, making China the first country in the world to reach this milestone.

The property market also showed signs of bottoming out, while the number of transactions in the A-share market increased significantly as expectations improved.

Analysts pointed to positive factors in the investments, which could result in an upturn in the rest of the year.

Sun Chuanwang, a professor at Xiamen University, told the Global Times on Friday that investment is expected to further recover in the remaining months of 2024, based on combined factors ranging from the implementation of major projects to fiscal support and progress in the manufacturing sector.

In addition, the issuance of ultra-long special government bonds and the raising of the ceiling for local government debt to replace existing hidden debt will help strengthen market expectations of local government investment, Sun said.

To achieve annual economic and social development goals, Fu said the country must redouble efforts to implement incremental policies to consolidate and increase momentum for economic recovery and growth.

Following the latest trend, several global financial institutions, including Goldman Sachs, Nomura and CitiBank, have recently raised their growth forecasts for China.