Economic momentum maintained

Encouraging signs as results exceed expectations in several main indicators

China continued its economic impetus last month, with better than expected results recorded in several major indicators, according to government data.

Analysts say the economy appears to be stabilizing, despite the fragile global market and problems remaining with domestic development.

The industrial sector continued the trend seen in July, with year-on-year growth climbing to 6.3 percent in August, a month-on-month increase of 0.3 percentage points. This was the fastest growth in five months, the National Bureau of Statistics said on Sept 13.

The market had expected industrial growth to expand by 6.1 percent, according to a Reuters poll.

Retail sales growth rose to 10.6 percent in August compared with 10.2 percent in July, while fixed-asset investment grew 8.2 percent year-on-year, up by 4.3 percentage points, according to the NBS.

"On the whole, there have been positive changes in the national economy, with main indicators picking up, structural reform deepening and growth of new sectors accelerating," says Sheng Laiyun, a spokesman for the bureau. "The overall trend of economic growth stabilizing this year has continued (in August)."

He says considerable headway has been made in structural reform. For example, steel industry stocks fell by 12.2 percent year-on-year in the first eight months, and the asset liability ratio of major industrial enterprises fell to 56.4 percent by the end of July, a 0.6 percentage point drop from a year ago.

Output of high-tech industries grew by 11.8 percent in August, higher than overall industrial output growth, while sales in emerging industries, such as online medical services and online education, saw fast growth.

"The August data beat market expectations, indicating that economic downturn pressure has eased and the country's growth-stabilizing policies have taken effect," says Liu Dongliang, an economist at China Merchants Bank.

Fixed-asset investment in particular was a bright spot in August, with four consecutive months of declines halted.

Gao Yuwei, a researcher at the Institute of International Finance, a Bank of China think tank, says: "There have been signs of investment stabilizing and improving."

However, Liu warns that the stabilization could be temporary and says more time is needed to ascertain whether the improving trend will continue.

"In the second half of this year, China may face tighter fiscal expenditure pressure, leading to slower growth of infrastructure investment, which could drag on overall fixed-asset investment growth," he adds.

Another potential risk is private investment, which grew by just 2.1 percent year-on-year in the first eight months, the same as in the January-July period and remaining at record lows, according to the NBS.

Contact the writers at xinzhiming@chinadaily.com.cn

(China Daily Africa Weekly 09/16/2016 page15)