The Chinese economy is expected to sit more firmly by the end of the year amid improving COVID-19 control situation and expected policy adjustments that will prioritize stabilizing the economy. economic growth, experts said on Oct. 8.
They commented after a private investigation showed the country’s service sector had made a comeback last month as the resurgence of local COVID-19 cases abated, underscoring the resilience of China’s economic recovery. .
Caixin China’s General Service Purchasing Managers Index stood at 53.4 in September, up from 46.7 in August, driven by strong sales and production increase amid COVID-19 content, media group Caixin said in an Oct.8 report.
A PMI reading above 50 signals an expansion of activities, while a reading below the level indicates a contraction.
Shao Yu, chief economist at Shanghai-listed Orient Securities, said the rebound in services activity shows the economy is shaking short-term disruptions like the resurgence of COVID-19 and heavy rains in parts. from the country.
Mitigating transient disruptions will combine with strengthening macroeconomic policy supports and policy adjustments to stabilize energy and raw material supply to support the economy, Shao said.
“The economy has ample momentum to stabilize and revive in the fourth quarter,” he said, adding that policy aids aimed at facilitating financing for small and medium-sized enterprises could also be stepped up and boost behavior. investment by manufacturers and credit expansion. .
According to Shao, with downward economic pressures intensifying in the third quarter, policymakers may be putting more weight than before on stabilizing economic growth among other policy objectives, such as controlling the consumption of energy and the defusing of financial risks.
His views echoed those expressed at an executive meeting of the State Council, the Chinese Cabinet, late last month. The meeting pledged to continue efforts to keep the economy running and to take more steps to secure the supply of electricity and natural gas over the coming winter.
Experts said China’s economic growth may have slowed to around 5% year-on-year in the third quarter, from 7.9% in the second, due to a higher baseline of national COVID- cases. 19, high prices of raw materials, energy- restrictions related to industrial capacity and a slowdown in the real estate sector.
While policymakers are expected to put more emphasis on economic and supply chain stability, the country’s GDP growth could fall to 5.6% on average over two years in the fourth quarter, from 5 % expected in third, according to a report from CITIC Securities. noted.
Accelerating capital investment in manufacturing and infrastructure sectors and reviving consumer activity could become key drivers of the economy in the fourth quarter, according to the report.
The Caixin report underlined business confidence in the current economic conditions. The indicator of business expectations rose further in expansion territory last month, although still below its long-term average, with companies surveyed expressing confidence that the outbreak will continue to be effectively controlled.
Liang Rui, vice president of Sunwoda, a lithium battery maker based in Shenzhen, Guangdong Province, also said that supportive policies for the private sector and small businesses have boosted the development prospects of the industry. business.
“China has launched many policies to support private enterprises and strive to provide a better business environment. Such support has enabled Sunwoda to access more funds and strengthen its technological resilience,” Liang said. .