China GDP Growth Continues to Slow, But Improvement may be Around the Corner

October 18th, 2012
in econ_news, syndication

Econintersect:  China has announced 3Q 2012 GDP growth of 7.4% from one year earlier.  This is the seventh consecutive quarter that Chinese GDP breaking-news-130pxgrowth has slowed.  The primary reasons for the slowdown are declining exports and lower domestic investment.  Exports to Europe have been especially hard hit due to many countries there in or approaching recession.

The third quarter number is slightly below the 7.6% recorded for 2Q 2012.  The average for the first three quarters is 7.7%.  This means that the fourth quarter must come in at 6.9% or higher growth for China to equal or exceed the government's 7.5% GDP growth objective for the year.

Follow up:

GDP actually grew 2.2% quarter-to-quarter, which Bloomberg says may indicate a bottoming of the 2012 economic slowdown.  The Bloomberg article attributes the quarterly pick up to stronger industrial production, retail sales and fixed asset investment in September after a very disappointing summer. Bloomberg is reflecting the optimistic spin present in the official Chinese press release. It will be key to watch for continued strength in October to produce some follow through for the fourth quarter to further advance the hoped for turnaround.

The current reading in far less than the 9.3% growth recorded in 3Q 2011 and even farther below the average growth near 10% since 1982.  Forecasts for the full year are being slashed.  The Financial Times reports that The World Bank has slashed the 2012 projection to 7.7% from the estimate just five months ago of 8.2%.

If China does achieve GDP growth of 7.5% for 2012 it will be the lowest four quarter result in the past 30 years, equal to the 7.5% GDP growth for the four quarters from 3Q 2008 through 2Q 2009 at the depths of The Great Recession.  Note:  the GDP number just announced has not been added to the following graph from Trading Economics.

china-gdp-growth-3q-2012

Other economic indicators have been weak for China in 2012, including manufacturing PMI, CPI, PPI and exports, as reported in GEI News articles.

The following is the entire press release by the National Bureau of Statistics of China:

Sheng Laiyun, Spokesman

National Bureau of Statistics of China, 18 October 2012

In the first three quarters of 2012, faced with the complicated and volatile economic environment at home and abroad, the CPC Central Committee and the State Council committed to the general tone of progressing steadily, correctly handled the relationships among steady and comparatively rapid economic development, the adjustment of economic structures and the management of expectation on inflation, paid more attention to maintaining steady growth, carried out the proactive fiscal policy and prudent monetary policy, and made great efforts in policy presetting and fine tuning. As a result, the overall national economy realized steady development with some positive changes: the economic development stabilized; structural adjustment speeded up and people’s livelihood continued to be improved.

 

According to the preliminary estimation, the gross domestic product (GDP) of China in the first three quarters of this year was 35,348.0 billion yuan, a year-on-year increase of 7.7 percent calculated at comparable prices. Specifically, the growth was 8.1 percent for the first quarter, 7.6 percent for the second quarter and 7.4 percent for the third quarter. The value added of the primary industry was 3,308.8 billion yuan, up by 4.2 percent; that of the secondary industry was 16,542.9 billion yuan, up by 8.1 percent; and that of the tertiary industry was 15,496.3 billion yuan, up by 7.9 percent. The gross domestic product of the third quarter of 2012 went up by 2.2 percent on a quarterly basis.

1. Agricultural Production Showed Good Momentum and Autumn Grain is Expected to Get Another Harvest.

The total output of summer grain was 129.95 million tons, an increase of 3.56 million tons, up by 2.8 percent year-on-year. The output of early rice was 33.29 million tons, an increase of 536 thousand tons, up by 1.6 percent. The autumn grain production is expected to get a good harvest again. In the first three quarters of 2012, the total output of pork, beef, mutton and poultry reached 57.28 million tons, a year-on-year growth of 5.0 percent. The output of pork reached 37.54 million tons, up by 5.2 percent. The number of pigs in stock was 468.22 million, up by 1.9 percent, while the number of slaughtered pigs was 492.98 million, an increase of 5.1 percent.

2. The Growth of Industrial Production Fell Slightly with Enterprises Profits Decreased Year-on-Year.

In the first three quarters, the total value added (calculated at comparable price) of the industrial enterprises above designated size was up by 10.0 percent year-on-year, a decrease of 0.5 percentage point compared with that in the first half of this year. An analysis on different types of enterprises showed that the value added growth of the state-owned and state holding enterprises went up by 6.3 percent; collective enterprises 7.6 percent; share-holding enterprises 11.8 percent; and 6.0 percent growth for enterprises funded by foreign investors or investors from Hong Kong, Macao and Taiwan provinces. The year-on-year growth of heavy industry was 9.7 percent, and 10.4 percent for the light industry. Out of all the 41 industrial divisions, 40 divisions registered year-on-year growth. In terms of different areas, the growth in eastern, central and western regions was 8.6 percent, 11.6 percent and 12.8 percent respectively. Out of the 471 kinds of industrial products, 343 of them registered year-on-year increase in output. Of this total, electricity went up by 3.6 percent, rolled steel up by 5.7 percent, cement up by 6.7 percent, ten kinds of nonferrous metals up by 7.1 percent, ethylene down by 2.9 percent, and motor vehicles up by 7.3 percent with the output of cars grew by 8.4 percent. In the first three quarters, the sales ratio of industrial enterprises above designated size was 97.8 percent, or 0.5 percentage point lower than that in the same period of last year. The export delivery value of the industrial enterprises above designated size reached 7,774.8 billion yuan, up by 5.8 percent. In September, the total value added of the industrial enterprises above designated size was up by 9.2 percent year-on-year, or 0.79 percent month-on-month.

In the first eight months of this year, the profits made by industrial enterprises above designated size stood at 3,059.7 billion yuan, down by 3.1 percent year-on-year. Among the 41 industrial divisions, 24 divisions registered year-on-year increase in profits, 16 divisions witnessed reduction in profits, and one division turned into losses from profits. In the first eight months, the costs for per-hundred-yuan turnover of primary activities of the industrial enterprises above designated size reached 85.47 yuan, an increase of 0.22 yuan over that of the first half. The profit rate of industrial enterprises above designated size from their primary activities was 5.31 percent.

3. Investment in Fixed Assets Enjoyed Steady and Fast Growth while the Growth of Total Planned Investment in Newly-started Projects Continued to Accelerate.

In the first three quarters, the investment in fixed assets (excluding rural households) was 25,693.3 billion yuan, a year-on-year growth of 20.5 percent (a real growth of 18.8 percent after deducting price factors), or 0.1 percentage point higher than that in the first half. Of this total, that in the state-owned and state holding enterprises reached 8,444.4 billion yuan, an increase of 13.6 percent. In term of different areas, the growth in eastern, central and western regions was 18.4 percent, 25.8 percent and 24.1 percent respectively. The investment in the primary industry reached 654.5 billion yuan, up by 32.2 percent year-on-year; that in the secondary industry was 11,366.2 billion yuan, up by 22.4 percent; and that in the tertiary industry was 13,672.5 billion yuan, up by 19.4 percent. Of the investment in the secondary industry, that in industry reached 11,074.5 billion yuan, up by 22.5 percent. Of this total, the investment in mining was 885.5 billion yuan, up by 17.4 percent; manufacturing 9,011.6 billion yuan, up by 23.5 percent; and the production and supply of electricity, heat, gas and water 1,177.4 billion yuan, up by 19.1 percent. The investment in infrastructural facilities (excluding the production and supply of electricity, heat, gas and water) was 3,867.7 billion yuan, up by 10.2 percent year-on-year, or 5.8 percentage points higher than that in the first half of the year. The funds in place for investment in the first three quarters were 28,940.8 billion yuan, up by 18.2 percent. Specifically, the government budgetary funds went up by 27.4 percent, domestic loans up by 8.8 percent, self-raising funds up by 21.9 percent, foreign investment down by 6.3 percent and funds from other sources up by 10.3 percent. The total planned investment in newly-started projects was 22,686.6 billion yuan, a year-on-year increase of 25.7 percent, which was 2.5 percentage points higher than that in the first half. The number of projects started in the first three quarters was 276,276, an increase of 19,327 year-on-year. In September, the investment in fixed assets (excluding rural households) went up by 1.63 percent month-on-month.

4. Investment Growth in Real Estate Development Continued to Drop while the Growth of the Sales of Commercial Buildings Turned from Negative to Positive.

In the first three quarters, the total investment in real estate development was 5,104.6 billion yuan, a year-on-year growth of 15.4 percent (a real growth of 13.8 percent after deducting price factors), which was 1.2 percentage points lower than that in the first half, or 16.6 percentage points lower than that in the same period of 2011. Of this total, the investment in residential buildings went up by 10.5 percent. Floor space of houses newly started in the first three quarters was 1,350.14 million square meters, down by 8.6 percent, the decline of which expanded by 1.5 percentage points compared with that in the first half of 2012, while it was up by 23.7 percent in the same period of last year. Specifically, the floor space of residential buildings started in the first three quarters dropped by 12.9 percent. The floor space of commercial buildings sold reached 684.41 million square meters, down by 4.0 percent, the decline of which narrowed by 6.0 percentage points than that in the first half, while it went up by 12.9 percent in the first three quarters of 2011. Of this total, that of residential buildings went down by 4.3 percent, the decline of which narrowed by 6.9 percentage points than that in the first half. The sales of commercial buildings in the first three quarters were 4,035.4 billion yuan, up by 2.7 percent, the growth of which dropped by 20.5 percentage points than that in the same period of last year, while it was down by 5.2 percent in the first half of 2012. Of this total, that of residential buildings was up by 3.3 percent, while it was down by 6.5 percent in the first half. In the first three quarters, the land space purchased by real estate development enterprises was 260.33 million square meters, down by 16.5 percent. The floor space of commercial buildings for sale was 326.70 million square meters, up by 35.6 percent. The sources of funds for real estate development enterprises reached 6,823.2 billion yuan, up by 10.1 percent, which was 4.4 percentage points higher than that in the first half. Specifically, the growth of domestic loans was up by 12.9 percent, self-raising funds up by 11.4 percent, foreign investment down by 53.3 percent and funds from other sources up by 9.6 percent.

5. Sales at Domestic Market Enjoyed Steady Growth while Retail Sales Grew Faster than Catering Industry.

In the first three quarters, the total retail sales of consumer goods reached 14,942.2 billion yuan, an increase of 14.1 percent (a real growth of 11.6 percent after deducting price factors), which was 0.3 percentage points lower than that in the first half. Specifically, the retail sales of the enterprises (units) above designated size stood at 7,158.0 billion yuan, up by 14.4 percent. Analyzed by different areas, the retail sales in urban areas reached 12,933.2 billion yuan, up by 14.0 percent, and that in rural areas stood at 2,009.0 billion yuan, up by 14.4 percent. Grouped by consumption patterns, the total income of catering industry was 1,667.3 billion yuan, up by 13.2 percent year-on-year; and retail sales of goods was 13,274.9 billion yuan, up by 14.2 percent. In particular, the retail sales of enterprises (units) above designated size reached 6,606.6 billion yuan, up by 14.6 percent. Specifically, the sales of motor vehicles rose by 6.9 percent, furniture grew up by 26.2 percent, and household appliances and audio-video equipment went up by 6.1 percent. In September, the total retail sales of consumer goods rose by 14.2 percent year-on-year (a real growth of 13.2 percent after deducting price factors), or 1.46 percent month-on-month.

6. The Growth of Imports and Exports Declined while Trade Surplus Increased.

The total value of imports and exports in the first three quarters of 2012 was 2,842.5 billion US dollars, a year-on-year growth of 6.2 percent, which was 1.8 percentage points lower than that in the first half, or 18.4 percentage points lower than that in the same period of 2011. The total value of exports was 1,495.4 billion US dollars, up by 7.4 percent; and that of imports was 1,347.1 billion US dollars, up by 4.8 percent. The trade surplus was 148.3 billion US dollars, an increase of 41.2 billion US dollars year-on-year. Of the total value of imports and exports, that from general trade was 1,499.0 billion US dollars, up by 5.9 percent; and that from processing trade was 982.9 billion US dollars, up by 2.2 percent. Among the value of exports, that from general trade was 729.8 billion US dollars, up by 8.3 percent; and that from processing trade was 630.9 billion US dollars, up by 3.0 percent. Among the value of imports, that from general trade was 769.2 billion US dollars, up by 3.6 percent; and that from processing trade was 352.0 billion US dollars, up by 0.9 percent. In September, the total value of imports and exports was 345.03 billion US dollars, up by 6.3 percent year-on-year. The total value of exports was 186.35 billion US dollars, up by 9.9%; and that of imports was 158.68 billion US dollars, up by 2.4%.

7. Money Supply Showed Faster Growth and Newly Increased Loans Increased Year-on-Year.

By the end of September, the balance of broad money (M2) was 94.37 trillion yuan, a year-on-year growth of 14.8 percent, which was 1.3 percentage points higher than that at the end of August, or 1.2 percentage points higher than that at the end of 2011; the balance of narrow money (M1) was 28.68 trillion yuan, up by 7.3 percent, which was 2.8 percentage points higher than that at the end of August, or 0.6 percentage points lower than that at the end of 2011; the balance of cash in circulation (M0) was 5.34 trillion yuan, up by 13.3 percent. At the end of September, the amount of outstanding loans was 61.51 trillion yuan, while the amount of outstanding deposits was 89.96 trillion yuan. In the first three quarters of 2012, the newly increased loans reached 6.72 trillion yuan, an increase of 1.04 trillion yuan; the newly increased deposits were 9.03 trillion yuan, or 924.3 billion yuan more than that in the same period of 2011.

8. The Year-on-Year Growth of Consumer Price Continued to Fall Back while Producer Price Declined.

In the first three quarters, the consumer price went up by 2.8 percent year-on-year, which was 0.5 percentage point lower than that in the first half, or 2.9 percentage points lower than that in the same period of last year. Specifically, the price went up by 2.9 percent in urban areas and 2.7 percent in rural areas. Grouped by commodity categories, prices for food rose by 5.5 percent; tobacco, liquor and articles rose by 3.3 percent; clothing up by 3.4 percent; household facilities, articles and maintenance services up by 2.1 percent; health care and personal articles grew by 2.1 percent; recreation, education, culture articles and services grew by 0.3 percent; housing went up by 2.0 percent; transportation and communication down by 0.2 percent. In September, the consumer prices went up by 1.9 percent year-on-year, or 0.3 percent month-on-month. In the first three quarters, the producer prices for industrial products went down by 1.5 percent, the decline of which expanded by 0.9 percentage point compared with that in the first half, while it went up by 7.0 percent in the first three quarters of 2011. In September, the price dropped by 3.6 percent year-on-year, or down by 0.1 percent month-on-month. The purchasing price for industrial producers was down by 1.5 percent year-on-year. In September, the price was down by 4.1 percent year-on-year or up by 0.1 percent month-on-month.

9. Urban and Rural Residents’ Income Increased Rapidly with a Higher Growth for Rural Residents.

In the first three quarters, the per capita total income of urban households was 20,190 yuan. Specifically, the per capita disposable income of urban households was 18,427 yuan, a year-on-year growth of 13.0 percent, or a real growth of 9.8 percent after deducting price factors, which was 2.0 percentage points higher than that in the same period of 2011. Of the per capita total income of urban households, the year-on-year growth of wage income was 12.7 percent; transferred income 12.4 percent; net income from business operation 15.4 percent; and 12.4 percent from property income. The per capita cash income of rural households was 6,778 yuan, up by 15.4 percent year-on-year, or 12.3 percent in real terms, dropped by 1.3 percentage points compared with that in the same period of last year. Specifically, the growth of wage income was 16.9 percent; household operation income 13.3 percent; property income 16.3 percent; and 22.4 percent from transferred income. The number of rural migrant workers at the end of the third quarter was 168.67 million, up by 3.0 percent year-on-year. The average monthly income of migrant workers was 2,249 yuan, up by 13.0 percent. In the first three quarters, the median of per capita disposable income of urban households was 16,358 yuan, up by 14.2 percent year-on-year; the median of per capita cash income of rural households was 5,788 yuan, up by 15.8 percent.

In the next phase, in accordance with the decisions and arrangements made by the central government, we should insist on the general tone of progressing steadily, pay more attention to maintaining steady growth, make earnest efforts to implement the promulgated policies and measures, promote economic structural adjustment and industrial upgrading which have won initial success, and lay a more solid foundation for sustainable and healthy development of the national economy.

Notes:

1. The growth rate of gross domestic product, value added of industrial enterprises above designated size and its sub-items are real growth by using comparable prices. The growth rates of other indicators are nominal growth by using current prices unless otherwise specified.

2. Approved by the State Council, the seasonally adjusted indicators of the following four would be released by the National Bureau of Statistics from April 2011: the quarterly gross domestic product (GDP), the month-on-month changes of value added of industrial enterprises above designated size, investment in fixed assets (excluding rural households), and total retail sales of consumer goods.

According to the auto-revision function of the seasonal adjustment model, quarterly GDP of 2011, GDP in the first three quarters of 2012 and the month-on-month changes of the value added of industrial enterprises above designated size, investment in fixed assets (excluding rural households), and total retail sales of consumer goods from September 2011 to September 2012 have been revised. The revised figures and figures for September as well as GDP of the third quarter of 2012 are as follows:

The quarter-on-quarter growth of GDP in each quarter of 2011 and in the first three quarters of 2012 was 2.2 percent, 2.5 percent, 2.4 percent, 1.7 percent, 1.5 percent, 2.0 percent and 2.2 percent respectively.

Month-on-Month Changes

Value Added of Industrial Enterprises above Designated Size

(%)

Investment in Fixed Assets (Excluding Rural Households)

(%)

Total Retail Sales of Consumer Goods

(%)

2011-September

0.95

1.88

1.33

October

0.76

1.75

1.47

November

0.74

1.13

1.40

December

0.96

1.47

1.52

2012-January

0.47

1.17

0.65

February

0.62

2.03

1.34

March

1.17

0.91

1.33

April

0.35

1.16

1.36

May

0.87

1.73

1.32

June

0.75

1.68

1.36

July

0.67

1.42

1.33

August

0.71

1.34

1.36

September

0.79

1.63

1.46

3. From 2012, the NBS implemented the new Industrial Classification for National Economic Activities (GB/T4754-2011). For more detailed information, please refer to: http://www.stats.gov.cn/tjbz

4. The eastern areas include 11 provinces and municipalities: Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong and Hainan; central areas cover 8 provinces: Shanxi, Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei and Hunan; western area include 12 provinces, autonomous regions and municipality: Inner Mongolia, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Qinghai, Ningxia and Xinjiang.

5. Data of imports and exports are from the General Administration of Customs; data of money supply and deposits and loans are from the People’s Bank of China.

6. The median of per capita income of urban and rural households refer to the per capita income of household lied in the middle of all surveyed households which are ranked from low to high based on per capital income level.

 

John Lounsbury

Sources:









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