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Signs of steady recovery seen for next year Release date: 2023-12-01    Source:China Daily

Despite China's factory activity contracting in November, experts said that further policy stimulus will be effective in bolstering the Chinese economy amid signs of improving business sentiment and the property market bottoming out.

Considering the stronger policy support and anticipated improvement in demand, the experts said they believe the economy will be on track for a steady recovery next year.

Both fiscal and monetary policy support should be stepped up in order to boost domestic demand and encourage the development of the private sector as well as micro and small businesses, they added.

Their comments came as data from the National Bureau of Statistics showed on Thursday that China's official purchasing managers index for the manufacturing sector fell to 49.4 in November from 49.5 in October, staying below the 50-point mark that separates contraction from growth.

Zhao Qinghe, an NBS statistician, said the manufacturing PMI declined as November marks the traditional offseason for some manufacturing sectors, and the reading was also impacted by factors such as insufficient market demand.

NBS data showed that the reading for manufacturers' expectations for future output and business operations came in at 55.8 in November after 55.6 in October, expressing strong optimism about future growth prospects.

Zhou Maohua, an analyst at China Everbright Bank, said that while the manufacturing PMI shrank in November, nonmanufacturing activity maintained expansion.

China's nonmanufacturing PMI read 50.2 in November, down from 50.6 a month earlier. Also, the country's official composite PMI, which includes both manufacturing and nonmanufacturing activities, came in at 50.4 in November compared with 50.7 in October, according to the NBS.

Zhou said he believes that both manufacturing and nonmanufacturing PMI readings will improve gradually in the following months, given China's continued recovery trend and a series of stimulus measures gradually taking effect.

The Organization for Economic Cooperation and Development has raised its 2023 annual GDP growth forecast for China to 5.2 percent, from 5.1 percent in September, above the country's preset annual GDP growth target of around 5 percent, according to the OECD's economic outlook report released on Wednesday.

China's economy is expected to grow 4.7 percent in 2024, up from the previous forecast of 4.6 percent, an earlier report said.

"Consumption growth remains subdued and activity in the real estate sector continues to weaken, but monetary policy easing and additional infrastructure investment will help underpin domestic demand," the OECD said in its latest report.

S&P Global China Ratings, one of the world's three most prominent rating agencies, said in a report that the good news for China's property developers is that a bottom is in sight, estimating that the nation's property sales will drop about 5 percent in 2024.

The foundation for recovery is not solid yet despite signs of a stabilizing economy, analysts said, adding that the country is still grappling with economic challenges including distress in the property sector, slowing external demand and souring private investment.

Li Chao, chief economist at Zheshang Securities Research Institute, said he expects to see strengthened coordination between monetary and fiscal policies next year.

More efforts will be made to expand domestic demand, boost infrastructure spending, support the development of micro and small businesses and the private sector, and stabilize the property sector, Li said.

To further bolster demand in the real estate sector, the country may adopt further measures to ease purchase restrictions and further reduce down payment ratios for homebuyers in first-tier cities, he added.

By Ouyang Shijia