After official manufacturing surveys rose for the first time in six months, Citigroup believes China will achieve greater GDP growth than previously expected.
Citi economists wrote in an update that they expect retail trade and industrial production to improve, while at the same time they expect the decline in exports to slow. This will contribute to the Chinese economy growing by 5 percent this year, Bloomberg writes.
“The cyclical bottom has arrived, with all eyes watching to see if organic demand will rise in line with political influence,” the brokerage wrote.
Citi’s previous estimate for China’s GDP was 4.7 percent, making the bank one of the most pessimistic brokerages on China.
-A fragile recovery
The bright spot: Factory activity in China is starting to improve. Here from a coating factory in Qingyuan, Guangdong Province. Image: Bloomberg
In a new Bloomberg poll, the average forecast among economists for China appears to be 5 percent growth for this year — which is in line with the official target. This is partly a result of many companies lowering their forecasts for the economy as the country’s real estate crisis weighs on activity.
Although there are numbers indicating that some sectors in China are going through a stabilization process, the upward trend is still fragile. Economists point to concerns about domestic demand and pressures in the labor market, along with ongoing problems within the real estate market.
This means that many are paying close attention to this week, a national holiday, to look for signs of increased consumer confidence.
Consumption increased by 29 percent
According to Bloomberg, sales at department stores and restaurants rose by 8.3 percent during the first three days of the holiday, compared to the same period last year. In contrast, there were also many regions that were still subject to Corona restrictions a year ago.
During this year’s holiday season, nearly 900 million domestic tourist trips are also expected to be made, according to the Chinese Ministry of Tourism. In this case, there will be a 5 percent increase over 2019, according to HSBC.
There are still some economists who believe that Xi Jinping and the Chinese authorities will have to increase support, especially for the real estate sector. According to official figures released by the authorities, the value of new home sales from China’s 100 largest real estate developers fell by 29 percent year-on-year in September. This is still an improvement from the previous month, when values fell by 34 percent year-on-year.
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