Working On Multiple Fronts to Keep Growth
By Morgan Brady
在多个前线工作以保持增长
经过数月的复苏后，中国经济开始感受到与美国的贸易战的压力。最近的数据表明，社会融资总额（衡量经济体贷款的广泛衡量标准 ）已降至7288亿元，仅为9月份贷款额的2.17亿元的三分之一。 中国央行已将银行的储备资本要求提前降低1个百分点，以释放更多资金并刺激经济增长。 但是，这种方法效果不是很好，还需要做更多的工作。
中国经济放缓的证据参差不齐。增长仍在继续，有些细分市场存在一些止步不前的迹象。银行需要振奋以提供更多贷款，企业需要提升信心以及借贷更多。 特别是房地产行业需要不断监测，因为需要控制过热的风险。直到2019年1月关税完全生效后，中美贸易战的影响可能才会真正发挥作用。在此之前，中国经济的内部发展仍然可以决定增长轨迹。
China’s economy is beginning to feel the pinch of the trade war with the US after many months of resilience. Recent data indicated that total social financing, which is a broad measure of loans in the economy that are tailored to spur growth, has declined to 728.8 billion Yuan, which is only one third of the amount of loans in September which stood at around 2.17 trillion Yuan. The Chinese central bank had reduced the reserve capital requirements for banks earlier by 1 percentage point to release more money into the stream and stimulate growth. However, this method was not very effective, and more needs to be done.
Tightening Credit Conditions
Some analysts are suggesting that tax cuts may be required to lift up the faltering sentiment among businesses and financial institutions. Businesses are reluctant to invest and financial institutions are cautious about lending due to weaker demand, rising default rates, and a housing market that is in recession.
China’s Trade Surplus Grows Even Bigger
Trade with the outside world grew more for China in the month of October, in contrast with sentiments prevailing in the finance sector and tight credit. In October, both imports and exports grew. China’s surplus with the outside world reached $34.01 during the month of October. This is lower than what economists had expected, but still higher than previous numbers.
There was a 15.6% growth in US dollar denominated exports during a period of one year that ended in October. As for imports, there was a 21.4% growth, according to the numbers issued by the General Administration of Customs. Growth in imports suggests that domestic demand is still within acceptable range.
As for the trade surplus with the US, it began to show signs of weakening as a result of the trade war between the two largest global economies. In October, trade surplus with the US was $31.8 billion, which is below the record printed in September at $34.13 billion. This development is likely to be welcomed by President Trump’s administration, which is seeking to reduce the trade deficit that totaled $258.1 over the first 10 months of this year with China.
Risk from the Property Market
US-China trade war and the excessively booming property market in China are two major pressures facing the Chinese economy at the moment. Risk from the latter may be much bigger than that coming from the former.
Prices of property have been rising significantly, which prompted intervention from the government. In August, a ban was placed in the city of Nanjing to prevent corporations from purchasing residential properties. This came after similar bans in Shanghai and additional cities, in an effort by the government to limit speculation that keeps driving the property market ever higher.
Although the government is trying to limit the property prices from overheating, it is not interested is seeing those prices drop to severely low levels. Households in China put two thirds of their savings in real estate properties, and the property market is a major revenue source for the government. It also drives bank loans and corporate investments. Therefore, a severe decline in property prices is likely to hamper growth, albeit not necessarily at the same rate.
The government is working on multiple fronts to keep growth on a steady path. It is seeking to stimulate areas like infrastructure and others, which might be affected in case the money supply moves to the real estate sector and away from other sectors, such as manufacturing.
Domestic Market and Unemployment Rate
Domestic market showed signs of growth, albeit at a decelerating rate. In September, auto sales (which accounted for around 10% of retail sales) grew at a rate of 6.4% from one year earlier, which is the lowest rate in seven years. This decline continued in October, and many analysts expect it to remain on the same track.
Unemployment rate declined slightly to 5% down from 4.9% in September, according to the official unemployment rate. Data for this indicator is available only for two years back which makes it difficult to see trends in the labour market and where it stands on the employment/unemployment cycle.
Conclusion
Evidence for slowdown in the Chinese economy is mixed. Growth still continues but there are some signs of faltering in some segments. Banks need a boost to lend more and businesses need a confidence boost as well to borrow more. The property sector, in particular, needs constant monitoring as the risk of overheating needs to be kept in check. Effects of the US-China trade war may not be felt to their true extent until after the tariffs take full effect in Januray 2019. Until then, internal developments in China’s economy can still determine growth trajectories.
