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China’s economy saw encouraging signs of recovery this past week, thanks to pro-growth policies boosting confidence.
After a five-month contraction, the manufacturing sector experienced a notable revival in October, with both production and market demand picking up amid improving business expectations.
China’s vice finance minister vowed to step up counter-cyclical fiscal policies and expressed confidence in achieving this year’s around 5% growth target. A top expert from the National Development and Reform Commission (NDRC), the state planner, called for extraordinary measures to seize the window for boosting market confidence. Many analysts expect the upcoming stimulus could be vast, with a new round of local government hidden debt swaps to reach as high as 10 trillion yuan.
In the financial market, China relaxed rules for foreign investors’ strategic investment in A-share companies, reducing asset thresholds and shortening lock-up period, among other measures.
The latest data showed that state-backed investors, known as the “National Team,” increased their A-share holdings by more than 400 billion yuan in the third quarter and bought 200 billion yuan of ETFs.
Analysts have shared a positive outlook for the market. Goldman Sachs expects Chinese equities to rise in two to three months after the US presidential election, while HSBC foresees China’s stock market growth in 2024 could surpass that of India’s.
In the real estate sector, a broad-based recovery was seen in October after extensive policy easing. For the first time since February, property sales returned to year-on-year growth, with new home sales ending a 15-month decline.
Top-tier cities posted particularly strong numbers, with second-hand home transactions in Beijing hitting a 10-month high and new home sales in Shenzhen surge 146% to hit the highest in three years. This recovery is spreading beyond just first-tier cities, as other regions also experienced positive momentum.
China’s largest state-owned banks has shifted to a new pricing mechanism for home mortgage loans, making it easier to adjust existing home mortgage rates, in a move to reduce pressure on home owners and boost consumption.
On the international stage, the EU imposed additional tariffs of up to 35.3% on Chinese electric vehicles following an anti-subsidy probe. China disagreed with and rejected the ruling, pledging to take necessary steps to protect Chinese firms’ rights, though the two sides will continue the talk on the tariff issue.
Beijing also voiced strong opposition to the new US regulations restricting American investment in China’s technology industries such as semiconductor and artificial intelligence, warning that such measures may disrupt global trade and innovation.
Here are some industry news. China released guidelines to promote replacement of fossil energy sources with renewable energy, aiming for “remarkable results” in green transition in all areas by 2030.
China’s power consumption for January through September surpassed expectations, and industry association predicts that the total consumption this year will accelerate compared to 2023.
The rare earth sector saw a sharp rally amid disruptions in imports from Myanmar, a crucial supplier.
China’s top steelmaker Baosteel posted a 65% drop in net profit for the third quarter dragged by falling steel prices, after earlier data showed major Chinese steel mills’ profits tumbled over 56% in the first nine months. Industry insiders said steel prices remained weak amid lacklustre demand.
China’s auto industry continues to grapple with profitability issues amid a persistent price war. In September, the industry’s profits tumbled nearly 30% year-over-year to hit the lowest this year. Amid the pressures, the auto dealership association urged bank to maintain steady credit terms for dealers to avoid further strain.
The shipping industry is seeing a marked increase in freight rates, especially on European routes, where major container companies have enacted sharp hikes. China’s aviation sector is on pace for a record-breaking year, with both passenger and cargo volumes expected to reach new highs, though the high-speed rail network’s expansion has led to competitive pricing.
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