Measures expected to foster new economic upturn

(China Daily) 08:46, December 16, 2021

A worker checks the operation of a carbon fiber production line at a factory in Lianyungang, Jiangsu province. [Photo by Geng Yuhe/for China Daily]

China is expected to ramp up pro-growth measures early next year to boost domestic demand and help foster a new economic upturn that may begin by the middle of 2022, officials and experts said on Wednesday.

The latest figures showed that the country's production activities remained robust, but consumption and investment remained lukewarm, underlining the necessity for policy support to bolster market demand and buffer downside risks, they said.

Industrial output, a key economic indicator, rose by 3.8 percent year-on-year in November, up from 3.5 percent in October, the National Bureau of Statistics said on Wednesday. Experts attributed the acceleration to the recovering supply of raw materials and energy, as well as buoyant export orders.

However, retail sales grew 3.9 percent year-on-year last month, down from 4.9 percent in October, as sporadic COVID-19 cases dented offline consumption activities, the bureau said.

The growth in fixed-asset investment also slowed, to 5.2 percent year-on-year during the January-November period, compared with 6.1 percent a month earlier, amid the slowdown in property development and infrastructure investment, the bureau said.

Noting the weakening consumption and investment figures, Fu Linghui, a spokesman for the bureau, said the nation will step up efforts to expand domestic demand, strengthen macro policy adjustments and ensure the containment of COVID-19 to bolster consumer confidence.

"There remains a good foundation for overcoming the challenges and maintaining steady economic development next year," Fu said, adding that domestic demand is expected to pick up steam amid improving household incomes, stable employment and the rollout of infrastructure projects.

The policy-setting Central Economic Work Conference acknowledged that the country is facing the pressure of demand contraction and required action to safeguard macroeconomic stability.

Wu Chaoming, chief economist at Chasing Securities, said it is important to ramp up macro policy support early next year, when economic downward pressure may intensify due to weaker export growth and a slowing property sector.

China's central bank is likely to cut the interest rate in the first half of next year, which will help reduce financing costs, boost consumption and shore up market confidence, he said.

Kristina Hooper, chief global market strategist at Invesco, a global asset manager, said she expects China's economy will pick up by the middle of next year amid macro support, and more cuts in the reserve requirement ratio may take place, following the one that took effect on Wednesday.

"We do expect consumer sentiment and confidence to rebound by mid-2022 once the real estate sector stabilizes and rapid vaccines rollouts bear more fruit," Hooper said.

On the fiscal front, infrastructure investment may speed up next year, due to the expected early issuance of local government special bonds and abundant infrastructure projects in the pipeline, said Li Qilin, chief economist with Hongta Securities.

The bureau also said that this year's major economic and social targets are expected to be well fulfilled. Up to 12.07 million urban jobs have been added in the first 11 months, surpassing the expected whole-year target.

(Web editor: Zhong Wenxing, Liang Jun)


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