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People's Daily Online>>Opinion

Will China's economy keep growing or slow down? (2)

By Ye Tan (Jiefang Daily)

08:08, March 07, 2012

Comparatively, situations of China's small and medium-sized enterprises are much worse. According to the HSBC China Manufacturing Purchasing Managers Index issued on March 1, the HSBC China Manufacturing PMI of February was 49.6, up 0.8 percentage points compared to that of January but still lower than the expectation.

The newly-received order of the enterprises had decreased for four successive months, the newly-increased export volume had set the largest negative growth rate since June of 2011, and the domestic demand still had not improved much. Due to the weak growth, the enterprises have reduced the storage of raw materials and delayed the delivery time, leading to the second excessive inventory in the past 19 months.

Policy presetting and fine tuning, as well as increasing investment promote the slow recovery of China’s economy. Main possible risks lie in three aspects: real economy overcapacity, consumption declining and business cost rising. Of which, the overcapacity will reduce corporate profit, while consumption declining may put investment into a dominant position once again, and rising of raw material costs may lead to stagflation.

Good news is that market consumer confidence has been restored somewhat. Since Jan. 20, CSI Consumer Index (399932) has risen to 5,944 points from 5,100 points with an increased volume of transactions. Meanwhile, the property sector in stock market also makes a good turn.

Recovery in consumer confidence is as weak as that of real economy, which may get down again if real estate and household consumption turn to drop.

【1】 【2】

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