China economy showing clear signs of stabilization: statistics bureau

BEIJING Mon Aug 26, 2013 1:55am EDT

A man sleeps outside a boutique at Taikoo Li Sanlitun North, in Beijing, August 24, 2013. REUTERS/Petar Kujundzic

A man sleeps outside a boutique at Taikoo Li Sanlitun North, in Beijing, August 24, 2013.

Credit: Reuters/Petar Kujundzic

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BEIJING (Reuters) - China's economy is showing clear signs of stabilization, helped by policy support and some improvement in global demand, and is on track to meet the government's 2013 growth target of 7.5 percent, the state statistics bureau said on Monday.

The issue of local government debt also remained under control, the National Bureau of Statistics said at a briefing organized by the foreign ministry that may have been aimed at allaying global concern about China's slowdown.

"We are confident that the economy is sustaining the positive momentum in the second half and confident of meeting the economic growth target," said Sheng Laiyun, the NBS's spokesman.

"The economy is showing some positive changes. Signs of growth stabilization are becoming more obvious," he said.

A private factory survey last week reinforced signs of stabilizing in the economy in the third quarter after the government took supportive measures, including scrapping taxes for small firms and accelerating investment in urban infrastructure and railways.

That followed a raft of July data which saw factory output grew at its fastest pace since the start of the year, and surprisingly strong trade data.

China's annual economic growth slowed to 7.5 percent in the second quarter, down from 7.7 percent in the three months ending March 31 - the ninth such deceleration in the past 10 quarters.

Beijing has said it is willing tolerate slower growth as it pushes reforms designed to reduce pollution, social inequity and an economic growth model which has an over-reliance on debt-financed construction and exports.

Sheng said it was very difficult for China to maintain a fast growth rate due to structural adjustments and declining surplus labor, but rising consumption, increasing urbanization and catch-up growth in less developed regions will be long-term economic drivers.

The government has launched a series of targeted measures recently to support the economy, including scrapping taxes for small firms, offering more help for ailing exporters and accelerating investment in urban infrastructure and railways.

But rapidly slowing growth has also been putting pressure on China's heavily indebted companies and provincial governments, raising concerns that the country's explosion in credit since 2008 may be on the verge of a meltdown.

Credit in China's economy almost doubled between 2008 and last year, pushing investment to 46 percent of GDP, much of that into infrastructure and property.

The China Banking Regulatory Commission has recently begun working with China's securities regulator to encourage the securitization of loans to help lenders sell problematic loans and is developing a platform to help banks sell such loans to investors.

That follows a move last year to let provincial governments set up their own debt-purchasing companies.

"The central government is attaching great importance to developments in the debt issue," Sheng said.

(Reporting by Kevin Yao; Editing by Paul Tait & Kim Coghill)

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Comments (6)
Are they building ghost cities again?

Aug 25, 2013 10:33pm EDT  --  Report as abuse
breezinthru wrote:
How can the improvement be attributed to an improvement in global demand?

The markets of developing nations are suffering due to an exodus in capital. Germany and France are the only two economies in Europe to show recent improvement and that improvement was modest.

In the US, the unemployment numbers appear to be improving but many people have abandoned the job search, a great many more have taken jobs far below their previous incomes and many of those jobs are only part time.

The China statistics must be in error, intentional or not.

Aug 25, 2013 12:38am EDT  --  Report as abuse
Oro_Invictus wrote:
… Which is exactly what they said just prior to this latest worsening of the slowdown. And that was before the latest rounds of figures showing how serious debt and credit issues had become.

Then again, even if it is rebounding, that is actually worse than a further slowdown; a further slowdown is necessary to achieve rebalancing before debt levels and financial infrastructure become untenable. So, basically, they’re either being facetious but at least they’re making some attempt at rebalancing, or they are doing their damnedest to ensure those people warning the PRC could suffer a lost decade or worse are proven right.

One marvels at the situation.

Aug 26, 2013 1:29am EDT  --  Report as abuse
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