Beijing (Reuters) – Given mixed signals from Chinese industry, analysts expect additional government aid.
The purchasing managers’ index unexpectedly rose to 50.7 points in November from 49.5 in October, according to the survey by Caixin and S&P released on Friday. The barometer is therefore above the 50 mark, from which it signals growth. In contrast, the purchasing managers’ index compiled by the National Statistics Authority remains below this threshold: it fell to 49.4 from the previous 49.5 points.
The contrasting development underscores “that more stimulus will likely be needed to restart growth in the world’s second-largest economy,” Deutsche Bank analysts wrote in a commentary. Hang Seng Bank’s chief economist, Dan Wang, also warned against premature optimism. Due to other economic problems, the situation of China’s industry is unlikely to improve in the short term, she said. “The priority now is clearly on mitigating the risks posed by local government debt as well as regional banks.”
The real estate crisis, weak consumer spending, high debt and geopolitical tensions are currently causing problems for the world export champion. In order to support the economic recovery after the corona pandemic, the People’s Republic has increased its efforts with several economic stimulus injections in recent months. China’s central bank lowered the so-called reserve rate for commercial banks. This is intended to release liquidity and stimulate the revival – also in the ailing real estate sector. Nevertheless, the authorities are reluctant to intervene strongly, for example in the area of monetary policy. This would further increase the interest rate differentials between China and the West, particularly the US – which in turn could weaken the yuan and increase the outflow of capital.
(Report by Liangping Gao and Joe Cash, written by Nette Nöstlinger, edited by Rene Wagner. If you have any questions, please contact our editorial team at [email protected])