If you thought that the move of the US Federal Reserve to cut interest rates for the first time in the past 4 years would be the only major economy providing a growth stimulus, you are wrong. With poorer growth rates in industrial output in August – 4.5% which is the slowest since March 2024 – Beijing could also be contemplating ways to stimulate demand in its economy, the second largest in the world. The pace was at least 30 basis points behind the 4.8% analysts predicted.
Data from the National Bureau of Statistics (NBS) on September 14 belied signs of sluggishness in the economy. While analysts were hoping for 2.5% growth in retail sales, it delivered only 2.1% — 60 basis points behind the 2.7% rise clocked in July.
Investment in fixed assets
The sluggishness was visible on other fronts too. From January to August in 2024, investments in fixed assets climbed 3.4% compared to the same period in 2023. Deceleration is clear here since the pace was 3.6% between January and July this year.
Experts said on September 13 that they were hoping for stimulus from Beijing.
“Where can the positive surprises come from? The positive surprises can come from – there’s some talk about China throwing more liquidity at the market, trying to accelerate mortgage reductions for homeowners in China, other measures to try to get what seems to be a downward spiral in the Chinese economy halted,” Arvind Sanger, managing partner, Geosphere Capital Management, a New York-based investment advisory firm, told CNBC.
Xi Jinping wants results
That Beijing was growing uncomfortable with the pace of economic growth was evident from what President Xi Jinping said on September 12. “All regions and departments should studiously implement all the major economic initiatives and measures introduced by the Central Committee and deliver on the economic tasks for the third and fourth quarters,” he remarked.
Significantly, sluggishness is visible not only in private consumption in China but also in public investments. Government spending, vital for any economy, was 2% lower between January and July this year compared to the same period in 2023.
This year steps were taken in China to pump in more money so that the Chinese banks could lend. But that doesn’t seem to be paying off to the extent Beijing would be comfortable with. Saturday’s data, therefore, triggers the hope that more stimulus could be announced in the next few weeks.
Crucial data on economic indicators announced on September 14, 2024 indicate the Chinese economy moving at a slower pace than what economists predicted. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
