adminSINGAPORE. — China’s Communist Party leaders will enter a policy-making summit this week with the economy on an upswing, services and manufacturing surveys show. A non-manufacturing Purchasing Managers’ Index rose to the highest level this year in October, a government report showed yesterday. The increase follows faster-than-estimated growth in two manufacturing indexes last week.
Signs of sustained strength in the world’s second-largest economy may give President Xi Jinping (pictured below) and Premier Li Keqiang more confidence in tackling reforms. At the same time, excessive credit growth, rising local-government debt and weaker export momentum may cap a stronger recovery from a two-quarter slowdown.
“Growth momentum will still be relatively robust” in the fourth quarter, said Lu Ting, head of Greater China economics at Bank of America Corp. in Hong Kong. “The government will tone down its pro-growth rhetoric but there won’t be a significant tightening of monetary policy as new leaders still need a stable economic and financial environment to consolidate their power base.”
The benchmark Shanghai Composite Index was little changed at the close, as property stocks declined amid concern the nation will introduce more measures to curb home prices.
Lu estimates gross domestic product will rise 7,7 percent in the fourth quarter from a year earlier, down from 7,8 percent in the July-September period.
China’s top party officials will meet in Beijing from November 9-12 to map out a blueprint for reform as the country heads for its slowest growth in more than two decades.
GDP will increase 7,6 percent this year, according to the median estimate of 52 economists surveyed by Bloomberg last month. That’s down from 7,7 percent in 2012 and the same pace as 1999, which was the weakest expansion since 1990. Growth may slide to 7,4 percent in 2014, according to the median projection of 47 analysts.
Premier Li reiterated that the government must balance the need for economic restructuring with a reasonable pace of growth to ensure sufficient employment, China National Radio reported yesterday, citing comments he made at a meeting with academics and business leaders.
The non-manufacturing PMI rose to 56,3 in October from 55,4 in September, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday. A number more than 50 indicates an expansion. HSBC Holdings Plc and Markit Economics will release a services PMI for October tomorrow.
Their index fell to 52,4 in September from 52,8 in August.
“The room for a further improvement in the non-manufacturing PMI is limited so we should still avoid being too bullish,” Lu said, pointing to a decline in new orders and a contraction in export orders in yesterday’s report.
A manufacturing index from HSBC and Markit rose to the highest level since March in October, according to a November 1 report. The federation’s gauge advanced to an 18-month high driven by faster output, while measures of new orders and export orders declined.— Bloomberg.
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