Economists and analysts say China is likely to show positive economic growth in the second quarter of this year, and growth is expected to pick up in June as work and production gradually resume. They say policymakers should introduce more easing measures, such as more infrastructure support, more additional fiscal relief, and lower real bank lending rates to cushion the impact of COVID-19 and stabilize global growth in the coming months.
Their comments come as producer prices in China rose in May at their slowest pace since March 2021, and as the government moved to coordinate COVID-19 control measures with economic development and stabilize industrial and supply chains in key sectors, leaving room for more stimulus to shore up the economy.
Zhong Zhengsheng, chief economist at Ping An Securities, pointed out that China’s economy is gradually returning to normal and the country is likely to see positive growth in the second quarter as the impact of the pandemic gradually subsides and that the government will implement more measures to stabilize growth. “For China’s economy, the worst moment may have passed and the country’s economic recovery is expected to gain momentum in June,” he said.
Meanwhile, the National Bureau of Statistics announced on June 10 that the Producer Price Index (PPI), which measures ex-factory prices in China, rose 6.4% year-on-year in May, following rising 8% the previous month, while the consumer price index (CPI), the main indicator of inflation in China, rose 2.1% year on year. another in May, unchanged from April.
Pour Lu Ting, chief economist for China at Nomura, said PPI and CPI inflation for May was broadly in line with market expectations and his team expects inflation of the first index decreases and that of the second increases slightly.
“Due to weak demand, supply disruptions in China since early March following the resurgence of COVID-19 have not led to a rapid increase in domestic inflation,” he said. -he explains. “That is why Beijing is not overly concerned regarding inflation when rolling out measures to stimulate demand, but the scope of policy rate cuts remains limited by the gradual rise in CPI inflation in China and US Federal Reserve Rate Hikes”.
In fact, compared to soaring prices in other major economies, the overall price level in China is within a controllable range. According to data from the US Department of Labor released on June 10, inflation hit a new 40-year high in May in the US, with the CPI there rising 8.6% year-on-year. .
Meanwhile, Wen Bin, chief researcher at China Minsheng Bank, noted that China’s overall inflation level is generally controllable, suggesting the country has room to step up support for macro policy. However, warning of downward pressures facing China’s economy, Wen said the government should forcefully implement macroeconomic policies to stabilize growth and ensure economic growth within a reasonable range in the second. trimester. Additional efforts should also be made to stimulate the supply of credit to the real economy, ensure supply and price stability, and prevent the risks of imported inflation.
The State Council – the Chinese government – recently unveiled a total of 33 measures covering fiscal, financial, investment, consumption and industrial policies to further stabilize the economy.
Credit expansion in China improved in May as the impact of the pandemic gradually eased. The increase in overall social financing, i.e. the total amount of real economy financing, was 2.79 trillion yuan (395 billion euros) in May, up 839.9 billion yuan (119 billion euros) compared to the same period last year, indicated on June 10 the People’s Bank of China, the central bank of the country.
At the same time, monetary conditions were eased, with China’s broad money supply, or M2, standing at 252.7 trillion yuan (35.803 billion euros) at the end of May, up 11, 1% year-on-year, with the central bank indicating the growth rate was 0.6 points higher than a month earlier.
Looking ahead, Robin Xing, chief China economist at Morgan Stanley, said policymakers might introduce more pandemic tax relief or postpone some construction bond quotas from 2023 to this year.
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