Blockbuster economic data is about to be released, and China's economy is expected to get off to a good start in the first quarter
With the acceleration of the release of macroeconomic policy effects and the accumulation of favorable factors for economic development, China's economy is expected to achieve a good start in the first quarter.
On April 16, the National Bureau of Statistics will release economic data such as GDP growth, industrial added value, fixed asset investment, and total retail sales of consumer goods in the first quarter. A number of institutions expect that China's economic growth may slow down year-on-year in the first quarter due to the high base effect. With the fading of factors such as the staggered month of the Spring Festival and the low base, indicators such as industry and consumption may fall in March, but the growth rate of manufacturing and infrastructure investment may maintain a high growth rate, and the overall economic momentum is still in the process of repair.
Premier Li Qiang of the State Council recently presided over a forum of experts and entrepreneurs on the economic situation to listen to opinions and suggestions on the current economic situation and the next step of economic work. Li Qiang pointed out that the complexity, severity and uncertainty of the current external environment are rising, and the problems existing in economic operation still need to be solved. The mainland has a solid foundation, many advantages, and great potential for development, and the long-term positive trend will not change, and we are confident that we have the ability to maintain sustained and healthy economic development.
The latest issue of the "CBN Chief Economist Confidence Index" released by the CBN Research Institute was 50.86, rising for two consecutive months. Economists believe that the mainland's economic recovery momentum is good, and the smooth start of the economy in the first quarter will lay the foundation for the achievement of the annual economic growth target.
The first quarter is expected to usher in a good start
Since the beginning of this year, with the coordinated efforts of macroeconomic stabilization policies, the economic recovery has accelerated. The National Bureau of Statistics previously released economic data for January ~ February was better than expected, and the national fixed asset investment in January ~ February increased by 4.2% year-on-year, and the growth rate was 1.2 percentage points faster than last year. The added value of industrial enterprises above designated size rose by 7.0 percent year-on-year, 0.2 percentage points faster than that in December last year.
Pang Ming, chief economist of Jones Lang LaSalle Greater China, told Yicai that the main indicators of the national economy in January ~ February showed a better-than-expected and stronger than seasonal acceleration trend, indicating that the stabilization and rebound of the national economy in the first two months was not only a restorative growth, but also a positive change in the balance of supply and demand. For the first time in many months, the growth rate of industrial, service, investment and other indicators has shown a momentum of simultaneous progress and common recovery, effectively making up for the difficulties and challenges in real estate investment.
According to the report released by the Bank of China Research Institute, from an internal point of view, macro policies have been further strengthened, the endogenous driving force of economic growth has been strengthened, and service consumption and manufacturing investment have become the main supports. It is preliminarily expected that GDP will increase by about 4.8% year-on-year in the first quarter.
There are also many experts and institutions whose forecasts are more optimistic. Wu Ge, chief economist of Changjiang Securities, said when participating in the chief survey of Yicai that at the beginning of this year, a number of economic data exceeded market expectations. Although there are effects such as the pulse of the service industry during the Spring Festival, the optimization of statistical caliber and the working day in leap years have also led to the upward disturbance of investment and industrial values under the condition of "decreasing" the base. Combined with the trend of industry and service industry since the beginning of the year, he expects that the real GDP in the first quarter is expected to be in the range of 5%~5.5%.
According to the National Economic Research Center of Peking University, with the continuous help of the steady growth policy, the domestic economy will continue to develop steadily, and GDP is expected to increase by 5.2% year-on-year in the first quarter of 2024, an increase of 0.7 percentage points over the same period in 2023.
The good start of the first quarter has laid a good foundation for achieving the full-year economic growth target. Yang Weimin, former deputy director of the Office of the Central Leading Group for Financial and Economic Affairs, said a few days ago that the economy has had a good start this year, and judging from the situation in January and February, the first quarter is likely to usher in a good start, which is very important for the guidance of economic development confidence throughout the year. Growth is expected to be more stable this year, and the gap between nominal and real growth is expected to narrow.
Lian Ping, president of Guangkai Chief Industry Research Institute, said that the mainland's GDP growth rate is expected to reach about 5% in 2024. He believes that under the active promotion of expansionary macroeconomic policies, the "troika" has coordinated to promote economic growth to varying degrees, with final consumption and capital formation driving GDP by 3.6 and 1.4 percentage points respectively, and the contribution of net exports to GDP is relatively neutral.
Industry is recovering steadily
Economists who participated in the CBN chief survey forecast the average year-on-year growth rate of industrial added value in March was 5.67%, lower than the 7.0% announced value in the previous month.
From the perspective of leading indicators, the National Bureau of Statistics released China's manufacturing purchasing managers' index (PMI) in March was 50.8%, up 1.7 percentage points from the previous month, and returned to the boom range of more than 50% after five months.
Zhang Liqun, a special analyst of the China Federation of Logistics and Purchasing, believes that the PMI index rebounded sharply in March and returned to above the boom and wither line. The production and business activity expectation index increased by 1.4 percentage points, indicating that business confidence has recovered, and the effect of a number of policies to stabilize growth and boost confidence since the beginning of the year has begun to appear.
CICC Macro pointed out that the manufacturing PMI rose to 50.8% in March beyond the season, indicating that the month-on-month improvement in the manufacturing industry has accelerated. However, the subsidence of temporary factors such as leap years, coupled with the increase in the base brought about by the rush to work after the epidemic in the same period last year, may affect the year-on-year growth rate of industrial added value. Judging from the high-frequency operating rate data, the year-on-year growth rate has mostly declined. It is expected that the year-on-year growth rate of industrial production in March will be 5%.
It is worth mentioning that the SME development index for the first quarter released by the China Association of Small and Medium Enterprises on April 9 was 89.3, up 0.2 points from the previous quarter and higher than the level of the same period in 2022, and the index turned upward again.
Ma Bin, executive vice president of the China Association of Small and Medium-sized Enterprises, said that the production rebound accelerated after the Spring Festival holiday, and the policy "combination punch" after the two sessions of the National People's Congress continued to be effective, the momentum of economic recovery continued to increase, the production and operation of enterprises continued to improve, and the development index of small and medium-sized enterprises rebounded again. Among the 8 industries surveyed, the domestic orders index of 5 industries and the sales price index of 4 industries increased.
Consumption potential continues to be unleashed
After experiencing the concentrated release of consumer demand brought about by the Spring Festival holiday, the consumption activities after the holiday showed a natural downward trend. Economists participating in the CBN chief survey forecast the average year-on-year growth rate of total retail sales of consumer goods in March at 4.3%, lower than the 5.5% announced value in the previous month.
CICC Macro pointed out that people's travel and consumption activities have stabilized since mid-March. At the same time, in mid-to-late March, some localities introduced policies to promote the trade-in of consumer goods, providing shopping subsidies for consumer goods such as automobiles and home appliances. Considering the high base in the same period last year due to the release of consumer demand after the epidemic, it is expected that the growth rate of total social zero in March this year may fall back to about 3.5%, and the corresponding compound growth rate since 2019 is roughly the same as that in January ~ February.
Chen Xing, chief macro analyst of Caitong Securities, said that from the perspective of automobile consumption, which accounts for the largest proportion of optional consumption, in the context of the active introduction of pro-consumption policies in various places, the consumption of the auto market still maintains a good performance, but the price reduction strategy of car companies in the peak sales season has led some consumers to enter a wait-and-see state. Considering the impact of a higher base in the same period last year, he expects that the year-on-year growth rate of total retail sales of consumer goods in March may drop slightly to 4%.
According to the latest data released by the China Association of Automobile Manufacturers on April 10, domestic sales of automobiles in January ~ March were 5.396 million units, a year-on-year increase of 6.2%, and automobile exports were 1.324 million units, a year-on-year increase of 33.2%. Vehicle exports in March totaled 502,000 units, reflecting a 33% m/m increase and a 37.9% y/y increase.
Investment growth may accelerate
The average forecast of economists participating in the chief survey of Yicai for the growth rate of fixed asset investment in January ~ March was 4.26%, slightly higher than the 4.2% announced data last month.
Wen Bin, chief economist of Minsheng Bank, expects that the investment in fixed assets in the first quarter will increase by about 4.4% year-on-year, higher than the 4.2% in January ~ February. In terms of infrastructure investment, in March, with the warming of the climate and the concentrated start of construction after the holiday, the construction progress of various places accelerated, and the business activity index of the construction industry recorded 56.2%, but it was still lower than the historical level of the same period.
Driven by fundamental factors such as exports and profits, the growth rate of manufacturing investment may still maintain a high growth rate. Wen Bin analysis, considering that exports have picked up slightly, the decline in profits of manufacturing enterprises has turned positive, and the policy requires "accelerating the development of new quality productivity", it is expected that the growth rate of manufacturing investment will rebound from 9.4% in January ~ February to about 10%.
In terms of real estate development investment, high-frequency data shows that the transaction area of commercial housing in 30 large and medium-sized cities in March was 8.75 million square meters, down 47% from the same period last year, and the land transaction area of 100 large and medium-sized cities was 72.81 million square meters, a year-on-year increase of 26.8%, and turned positive year-on-year for the first time in nearly nine months. Wen Bin said that residents' willingness to buy houses is still weak, but the confidence of real estate companies has recovered, and the income from land transfer is expected to support real estate development investment, and the base decline in the same period last year is expected to narrow real estate development investment from -9.0% in January ~ February to about -8.7%.
Lian Ping believes that the construction of the "three major projects" may drive trillions of yuan of investment funds, about 9% of the annual real estate investment. The special loan for "guaranteed delivery of buildings" and the local real estate financing coordination mechanism will partially alleviate the cash flow pressure of real estate enterprises. The revision of the land auction rules in some large cities may promote some central enterprises and state-owned enterprises to moderately increase the scale of investment in land reserves, which in turn will help the growth rate of real estate investment.
(This article is from Yicai)