Must-Read China Economic News (Oct. 10-18)
Must-Read China Economic News (Oct. 10-18)
Latest economic performance; China-EU negotiations on EV tariffs; mortgate rate adjustments; fiscal policy packages...
Greetings and welcome to the latest edition of PekingEnsight! We're thrilled to have you join us once again as we navigate the ever-evolving landscape of the Chinese economy.
⭐Under the Spotlight
China's Jan.-Sept. economic performance
The latest data from the National Bureau of Statistics indicated an upward trend in the Chinese economy in the first nine months of 2024, with the country's GDP growing 4.8 percent year on year to around 94.97 trillion yuan (13.33 trillion USD).
Industrial output climbed 5.8 percent compared with a year earlier in the first nine months, as robust increases were seen in equipment and high-tech manufacturing industries. The service sector reported continued recovery with a 4.7-percent increase in added value.
Consumption maintained an upward trend during the period with retail sales of consumer goods up 3.3 percent from a year ago. Fixed-asset investment rose 3.4 percent, spurred by vibrant capital influx into high-tech industries.
Debt relief for local governments
An unusually strong statement from China's finance ministry, announcing the "strongest debt relief measures in recent years," has garnered significant attention both domestically and internationally.
At a press conference, finance minister Lan Fo'an unveiled a plan to substantially raise the local government debt ceiling in one lump sum, paving the way for the replacement of existing hidden local debts through more government bond issuance.
The move is expected to help clarify and gradually alleviate implicit debt risks, analysts said. Estimates suggest that the scale of this new round of debt replacement could exceed 2.2 trillion yuan.
China-EU negotiations on EV tariffs
China and the European Union (EU) have yet to reach a mutually acceptable solution on the EU's anti-subsidy case involving Chinese electric vehicles (EV), despite important progress in certain areas, China's commerce ministry has said.
China has formally invited the EU to send over a technical team to carry on the next phase of face-to-face consultations, said a spokesperson with the ministry in response to a relevant query, noting that China's attitude and sincerity in seeking a solution through dialogue and consultation has not changed.
China hopes that the EU will arrange the visit as soon as possible and push forward the consultations with a constructive attitude in order to reach an appropriate solution at an early date, the spokesperson said.
Technical teams from the two sides have conducted eight rounds of intensive negotiations since Sept. 20 in Brussels, but major differences still remain.
Deepened China-ASEAN trade cooperation
Leaders from China and the Association of Southeast Asian Nations (ASEAN) have announced the substantial conclusion of Version 3.0 China-ASEAN Free Trade Area (FTA) upgrade negotiations and issued a joint statement, according to China's Ministry of Commerce.
The statement covers existing areas of the China-ASEAN FTA agreement as well as emerging areas that have great cooperation potential, including the digital economy, the green economy and supply chain interconnectivity, the ministry said.
⭐Key Macroeconomic Indicators:
CPI, PPI
China's consumer price index (CPI), a main gauge of inflation, was up 0.4 percent year on year in September, lower from a 0.6-percent rise in August, according to the National Bureau of Statistics (NBS).
NBS data showed the producer price index (PPI), which measures costs for goods at the factory gate, went down 2.8 percent year on year in September.
On a monthly basis, the PPI edged down 0.6 percent, narrowing from a 0.7-percent decrease a month earlier.
Home prices
The decline in the prices of commercial residential homes in China's 70 large and medium-sized cities stabilized on a month-on-month basis last month, official data showed.
In the country's first-tier cities, namely Beijing, Shanghai, Guangzhou and Shenzhen, new home prices edged down by 0.5 percent, compared with a 0.3-percent drop in the previous month. Second- and third-tier cities both registered declines of 0.7 percent month on month.
In September, prices of second-hand homes fell by 1.2 percent in first-tier cities month on month, and 0.9 percent in second-tier and third-tier cities, according to the National Bureau of Statistics.
Auto sales
China's automobile industry has revealed a growth trend, with its production and sales of vehicles increasing steadily in the first nine months of 2024, according to the China Association of Automobile Manufacturers.
From January to September, China's auto production totaled about 21.47 million units, up 1.9 percent year on year. Auto sales stood at 21.57 million units, an increase of 2.4 percent from the same period last year.
Foreign trade
China's total goods imports and exports expanded 5.3 percent year on year in yuan terms in the first three quarters of this year, maintaining stable growth, official data showed.
The goods trade volume expanded to 32.33 trillion yuan in the January-September period, reaching a new high, according to the General Administration of Customs.
⭐Policy Moves Much-Talked:
Monetary support for capital market:
China's central bank has launched the Securities, Funds and Insurance companies Swap Facility (SFISF), with the first batch of application quota exceeding 200 billion yuan.
The People's Bank of China announced the decision to set up the SFISF in a statement last week, as part of efforts to support the healthy and stable development of the capital market.
The tool will allow eligible securities, funds and insurance companies to use their assets including bonds, stock ETFs and holdings in constituents of the CSI 300 Index as collateral in exchange for highly liquid assets such as treasury bonds and central bank bills, according to the central bank.
Mortgate rate adjustments
China's six major national commercial banks have unveiled detailed measures to adjust interest rates for outstanding mortgage loans in line with the central bank's policies to stabilize the property market.
The adjustment will be implemented starting from Oct. 25, 2024, according to statements by major lenders namely Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications and Postal Savings Bank of China.
Mortgage rates for first homes, second homes and more will be reduced to 30 basis points below the loan prime rate, the statements said. The move is part of China's efforts to "reverse the downturn of and stabilize the real estate market."
Fiscal policy bundle
China will introduce a package of targeted incremental fiscal policy measures in the near future to boost the economy, according to a press conference by the finance ministry.
The package includes increasing the debt ceiling on a relatively large scale in a lump sum to replace existing hidden debts of local governments and help defuse their debt risks.
In terms of special-purpose bonds, with the pending issuance quota plus the funds that have been issued but not yet used, there is a total of 2.3 trillion yuan in special-purpose bond funds available for use from October to December this year.
For the property market, the ministry said the country would apply a set of fiscal policy tools including local government special-purpose bonds, special funds and taxation policies to help stabilize the sector.
⭐Read More:
China launches nationwide sample survey of population changes
China will conduct a nationwide sample survey of population changes this year to accurately and promptly monitor the country's demographic development and provide basic information for its population policies, according to the National Bureau of Statistics.
From Oct. 10 to Nov. 30, selected residents will be asked about their basic information, including age, gender, ethnic groups, educational levels, job positions, marital and fertility status and housing conditions. The reference time for the survey will be Nov. 1, 2024.
China's new energy passenger car sales surge in September
China's new energy passenger vehicle market continued to see robust growth in September, with retail sales reaching 1.12 million units, industry association data showed.
The figure marked a 50.9 percent year-on-year increase and a 9.6 percent jump from the previous month, according to the China Passenger Car Association.
Compiled by Shaun G