China’s economy continued to grow at more moderate pace in March, according to new business survey data released today.
The sales managers’ index produced by World Economics scored 51.2 in February, equal to the month before. As the score is above 50, it implies the economy grew over the month. While it is the joint-lowest ever SMI score for China, it also suggests the country’s growth slowdown has stalled.
The survey also revealed growth in business confidence had fallen, suggesting Chinese firms were not expecting faster growth any time soon.
Official figures say the Chinese economy grew by 6.8 per cent between October and December compared with the same period last year. It marked the weakest growth for 25 years.
However, the survey data suggest the slowdown may have been sharper. Growth figures calculated by Lombard Street Research, a consultancy, suggest annual growth was just 3.3 per cent between October and December. The company uses official data but processes it in a different way.
At the Communists Party’s National People’s Congress, a key political session, premier Li Keqiang said this years growth target was 6.5 to seven per cent.
The government is attempting to rebalance the economy away from debt-fuelled investment to consumption. Economists from LSR said:
Reform is still being encouraged, but the session re-emphasised that the Communist party’s bottom line, as always, remains social stability.
Policymakers pledged to refrain from another 2008-style stimulus, but as labour market conditions deteriorate further, the real test of their resolve to reform mostly still lies ahead. In those sectors where the authorities have already been put to the test, they have largely flunked.