China's economy has momentum to sustain growth
- By Mo Kaiwei
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E-mail China.org.cn, April 15, 2016
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Lighten the load [By Zhai Haijun / China.org.cn] |
As the national economic performance for the first quarter is set to be released in April, many observers say that GDP growth may lie around 6.7 percent, since data has shown that the world's second largest economy may be steadily recovering.
This prospect indicates that China's economy has gained what it takes to pick up the slack and that all sectors should step out of the shadows before embracing a brighter outlook.
The confidence is by no means blind optimism but comes from stronger economic data. According to the National Bureau of Statistics, China's manufacturing Purchasing Managers' Index (PMI) in March rose to 50.2 percent, up 1.2 percentage points over the previous month and a return to the normal growth territory for the first time in eight months.
Moreover, non-manufacturing PMI also rose to 53.8 percent, a much bigger expansion of 1.1 percentage points when compared to same period last year.
The rise in both sectors implies a more stabilized economic foundation and the good results of China's supply-side reform which promoted rebound in manufacturing and the market.
A bullish outlook in the manufacturing sector in turn boosted fixed assets investment. After the Lunar Chinese New Year, all levels of government have beefed up de-stocking efforts in the real estate industry, boosted mild recovery and driven productivity and consumption.
There's more good news when it comes to the country's power consumption, a key barometer of economic activity, which stood at 876.2 billion kilowatt hours (kwh) in February, up 2 percent year-on-year. The Consumer Price Index (CPI) in February expanded on a larger scale when compared to the previous months as well as same period last year. The drop in Producer Price Index (PPI), which measures wholesale inflation, narrowed as cost prices for some industrial products increased or the decline narrowed. The fall in coal use for power generation also narrowed in March as the steel and chemical industries rebounded.
As reform in state-owned enterprises (SOEs) deepens and China's economic structure optimizes, the country's economic fundamental is set to be consolidated.
Moreover, the powerhouse still has momentum to sustain growth. Despite a lackluster global economy and difficulties for companies to upgrade and transform amid a dropping labor supply, soaring labor costs and strained financing, the central government has rolled out efforts to reduce taxes especially for small and medium-sized enterprises (SMEs). Replacing business tax with VAT, in particular, will save businesses more than 500 billion yuan (US$77.2 billion) in tax which is bound to generate a continued momentum of growth with a short-term drop in fiscal revenue.
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