China’s economic recovery is expected to gain momentum in the last quarter of the year as monetary supports strengthen and are expected to ease cost pressures on small businesses and boost credit expansion, said Friday. experts.
“Policy measures to boost credit growth are likely to be put in place and ease downward economic pressures, which, combined with the mitigation of transient disruptions, will help the economy strengthen in the fourth quarter,” said Chen Xing, chief macroeconomic analyst at Zhongtai. Securities.
Chen said the window for China to ease monetary policy may not close until the US Federal Reserve raises key interest rates. The more accommodating monetary situation will ease the financial burden on small private businesses, ease the increased cost pressure on them and help stabilize employment.
Chinese manufacturers saw a widespread increase in purchasing costs last month, according to the National Bureau of Statistics. Additionally, more than 40 percent of small manufacturers polled by NBS said they face multiple challenges, including tight cash flow and high raw material costs.
Against a backdrop of slowing production and demand, last month the manufacturing sector experienced its first contraction since February 2020, as indicated by the official purchasing managers index, which edged down to 49, 6 in September compared to 50.1 in August, the NBS announced Thursday.
Separately, the Caixin media group’s PMI figure for September stood at 50, down from 49.2 in August, but it was its second lowest figure in 17 months.
The lukewarm PMI readings reflected intensified downward economic pressure on the Chinese economy in the third quarter, due to local cases of COVID-19, heavy rainfall, supply side disruptions, high costs of commodities and the downturn in the real estate market, experts said.
However, “monetary policy will moderately intensify efforts to stabilize economic growth in the fourth quarter,” said Wang Qing, chief macroeconomic analyst at Golden Credit Rating International.
Wang said the People’s Bank of China, the central bank, should deploy structural policy tools to boost green lending and may even cut the reserve requirement ratio again in the fourth quarter, as it did in July. Such cuts in the RRR, the proportion of funds that banks are required to hold in reserve, are conducive to lower market interest rates.
“The growth rates of loans and social finance will recover slightly in the fourth quarter. This will support the stabilization of economic growth at the end of the year and into the beginning of 2022,” Wang said.
Experts said other factors will also support economic expansion in the fourth quarter, including accelerating budget spending and infrastructure investment, and picking up consumer spending as local cases of COVID-19 emerge. mastered.
As offline shopping and infrastructure investments counter the downward pressure, China’s economy is expected to grow 4% year-on-year in the fourth quarter and 5.2% on average over two years, compared with 5% in the fourth quarter. third quarter, according to a Bank of China report.