A large advertisement promoting China’s “trade-in” policy is posted outside a housing construction project in Nanjing, China, on November 29, 2024.
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China’s recent efforts to accelerate growth have not yet had a widespread impact, data and corporate earnings show, suggesting the world’s second-largest economy will not recover quickly. are.
Pocket growth from real estate to manufacturing has improved since the Chinese government began announcing stimulus packages in late September. But companies have remained cautious in disclosing their outlooks in recent weeks.
Asked about the impact of economic stimulus measures during a financial results conference on Friday, food delivery giant Meituan only said that the average order value for hotels in the new travel reservation business in October decreased by a smaller amount compared to the same month last year. Ta. .
“It will take some time for the positive effects to be fully realized and further effects to be seen, but [expand] We are confident that these policies will gradually support the real economy, stimulate consumer spending and bring more growth opportunities to our business for more consumption categories.” President Chen Shaohui said. Earnings calls.
Executives at e-commerce company Alibaba and social media operator Tencent shared similar comments during their earnings conferences last month, saying it would take time for economic stimulus to translate into growth.
Teneo managing director Gabriel Wildo said in a note on Monday that the enhanced stimulus package aims to meet this year’s official target of around 5% and a similar pace next year, while preventing financial instability. He said that For him, the economic tone shows that “technological self-sufficiency and national security remain top priorities” for China.
“Looking ahead, our sources expect stimulus to come out gradually in 2025 in a phased and data-dependent manner,” Wildau said. “‘Just enough,’ rather than ‘whatever it takes,’ will be the guiding principle.”
Preliminary economic indicators for November confirm that growth is improving but not explosive.
According to LSEG data, Caixin’s Manufacturing Purchasing Managers Index showed further expansion in factory activity at 51.5, the highest since June. The official PMI stood at 50.3, the highest since April. Retail sales and industrial data for November will be released on December 16th.
According to Caixin’s manufacturing labor statistics, employment contracted in November for the third consecutive month. This shows that “the effects of the economic stimulus package have not yet been felt in the labor market and business confidence in expanding the workforce needs to be strengthened,” said Wang Zhe, senior economist at Caixin Insight Group. stated in the report.
“The economic downturn seems to have bottomed out, but the situation needs to improve further,” Wang said, noting that the risk of “external uncertainty” is increasing.
The United States on Monday triggered yet another regulation aimed at crimping Chinese chipmakers. President-elect Donald Trump announced last week that he plans to impose a 10% tariff on all Chinese imports from the United States after he takes office in January.
“As geopolitical temperatures rise, markets will only salivate for more stimulus,” according to a study on Chinese companies released Monday by U.S.-based advisory firm China Beige Book. .
The company surveyed 1,502 companies from Nov. 14 to Nov. 26 and found that retail spending, along with home sales, improved from a year earlier, despite a “widespread” weakness in services consumption. It turned out that. The report also noted that the proportion of respondents who borrowed further rose to its highest level since May 2022, indicating a recovery in demand.
“Beijing’s economic stimulus package has prompted business suspensions this month,” the report said. “However, this situation is unlikely to continue without the promise of additional support.”
China’s Ministry of Finance has said further financial support may be provided next year. Investors are also keeping an eye on the details of China’s annual economic planning conference, usually held in mid-December.
