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A benchmark measure of confidence in China’s economy remained above the growth threshold for the eighth straight month in March, reflecting positive sentiment amid signs from the country’s latest policy meetings indicating a move toward more proactive economic strategies.
The Chief Economists Confidence Index registered at 50.5 this month, up slightly from 50.2 in February and 50.3 in January, based on a survey of 13 prominent China-based chief economists. Values above 50 denote optimism.
Insights from the ongoing national legislative sessions suggest that the government is adopting a more energetic approach to economic management.
The 4.5 to 5 percent growth target for this year shows cautiousness given external uncertainties and swift shifts within the domestic economy, with room for policy adaptation and risk mitigation, explained Cheng Shi, chief economist at a major Chinese bank.
Policy announcements from the legislative sessions, including the issuance of CNY 1.3 trillion (about USD 188 billion) in ultra-long-term treasury bonds, CNY 800 billion (roughly USD 115.7 billion) in new financial tools, and CNY 100 billion in special funds to stimulate demand domestically, are expected to support investment and consumer activity in the near term, noted Cai Wei, a leading economist.
Over the longer term, initiatives such as a new Artificial Intelligence Plus strategy, efforts to promote industrial modernization, and strategic planning for upcoming sectors aim to further refine and upgrade China’s economic framework, Cai added.
Global economic growth is projected to continue at a sluggish pace this year, with trade protectionist measures and geopolitical concerns remaining critical uncertainties, according to Wang Han, chief economist at a major securities company.
China’s focus will be on reigniting internal demand and restructuring its economy, Wang stated, with a growth goal close to 5 percent reliant primarily on boosting consumption and stabilizing investments.
Economic Indicators
The consumer price index increased by 1.3 percent in February compared to the previous year, surpassing economists’ forecast of around 1 percent, mainly due to the Chinese New Year holiday. Meanwhile, the producer price index declined by 0.9 percent, better than the expected 1.2 percent decrease.
Retail sales likely grew by 2.4 percent during January and February year-over-year, an improvement from December’s 0.9 percent gain, according to economists.
Concrete measures to stimulate consumption, along with government subsidies for trade-in programs, are helping to unlock pent-up demand for upgrades, supporting growth in the retail sector, said Wen Bin, chief economist at a notable Chinese bank.
Economists’ average forecast for industrial output in the first two months of the year stood at 5.3 percent, slightly higher than December’s 5.2 percent. Fixed asset investment is expected to have shrunk by 3.2 percent, an improvement from a 3.8 percent decline in the previous year.
Since the first half typically sees stronger fixed asset investment, analysts anticipate a rebound early this year, according to Lu Zhengwei, chief economist at a prominent Chinese bank.
China’s trade surplus is estimated at around USD 157.7 billion for the two months ending February 28, with forecasts for import and export growth at 5.1 percent and 5.4 percent, respectively, up from December’s estimates of 4.4 percent and 5.2 percent.
Ports’ high-frequency data suggest that exports may continue growing at a relatively rapid clip this year, with cargo and container throughput rising by 9.3 percent and 13 percent, respectively, as of late February, noted Lu.
The yuan’s exchange rate against the U.S. dollar is predicted to be 6.9 at the end of this month and 6.8 by year’s end. The yuan has been steadily appreciating against the dollar, setting the stage for a modest further increase, expressed Lian Ping, chief economist at a research institute.
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