Archive for ‘National Bureau of Statistics (NBS)’

31/05/2019

China’s manufacturing index drops into negative territory in May as economic pressures mount

  • The manufacturing purchasing managers’ index (PMI), a gauge of sentiment among factory operators, fell to 49.4 in May
  • This was a decrease on April’s performance of 50.1, and below the median expectations of a poll of Bloomberg analysts, which had predicted a drop to just 49.9
An index reading above 50 indicates growth, while anything below 50 indicates a contraction. Photo: AFP
An index reading above 50 indicates growth, while anything below 50 indicates a contraction. Photo: AFP
China’s manufacturing purchasing managers’ index fell further in May, suggesting the economy is continuing to slow amid the escalating trade war with the United States.
The manufacturing purchasing managers’ index (PMI), a gauge of sentiment among factory operators, fell to 49.4 in May, a decrease on 
April’s performance

of 50.1, and well below the median expectations of a poll of Bloomberg analysts, which had predicted a drop to 49.9. A reading of below 50 means that the activity in the sector is contracting.

The 49.4 reading was the lowest since February’s 49.2.
Non-manufacturing PMI, which covers the services and construction sectors, remained the same as last month at 54.3, in line with the expectations of the Bloomberg poll.
“The fall in the headline index was mostly driven by weaker new orders. Export orders dropped back particularly sharply, which suggests that [US President Donald] Trump’s latest tariff hike may already be undermining foreign demand,” said Julian Evans-Pritchard, senior China economist at Capital Economics.
“Stocks of raw materials continued to decline, reversing the build-up of inventories ahead of the 1 April VAT cut that helped to temporarily boost output in March.”

The composite PMI, which combines both manufacturing and services activity, was 53.3 in May, a slight decrease on 53.4 a month earlier.

An index reading above 50 indicates growth, while anything below 50 indicates a contraction.

The fall in the headline index was mostly driven by weaker new orders. Export orders dropped back particularly sharply, which suggests that [US President Donald] Trump’s latest tariff hike may already be undermining foreign demand.Julian Evans-Pritchard

The dip into contractionary territory for China’s manufacturing sentiment will be a concern to policymakers in Beijing, as they struggle to contain the effect the trade war is having on both economic mood and investment sentiment. While both composite and non-manufacturing PMIs remained above contraction levels, their stagnation points to continued challenges facing China’s economy.
The new data, released by the National Bureau of Statistics (NBS), combined with weaker economic data readings for April, suggest that Chinese growth slowed in the second quarter after stabilising at 6.4 per cent in the first quarter.
Details of the data show that within the manufacturing PMI, new orders were 49.8, down from 51.4 in April. Output also fell to 51.7, from 52.1 last month, while employment fell to 47.0 from 47.2 and new export orders plunged to 46.5 from 49.2.
Within the non-manufacturing PMI, the service sector was up to 53.5 from 53.2 in April, which the NBS said showed that “the service industry continued to maintain rapid growth”.
Details of the data show that within the manufacturing purchasing managers’ index, new orders were 49.8, down from 51.4 in April Photo: AFP
Details of the data show that within the manufacturing purchasing managers’ index, new orders were 49.8, down from 51.4 in April Photo: AFP

“China’s non-manufacturing business activity index was 54.3 per cent, which was the same as last month, indicating that the non-manufacturing industry continued to develop steadily and rapidly,” said the NBS statement.

Zhao Qinghe, senior statistician at the Service Industry Research Centre at the NBS, said that “there was some fluctuation in the manufacturing boom” and pointed to slowing demand as the cause of the slump.

“In May, the manufacturing PMI fell back. Among the 21 industries surveyed, 13 of the industry’s production indices are located in the expansion range, indicating that most industries in the manufacturing industry are relatively stable in production and operation,” said Zhao.

Among the 21 industries surveyed, 13 of the industry’s production indices are located in the expansion range, indicating that most industries in the manufacturing industry are relatively stable in production and operation.Zhao Qinghe

Zhao added that “the overall production and operation activities of Chinese enterprises have maintained a stable development trend”.
The deterioration in the PMI sentiment data was expected after the US escalated the trade war on May 10. From Saturday, a higher tariff of 25 per cent – increased from the earlier 10 per cent rate – will apply to US$200 billion of Chinese imports to the US. The US is also processing a tariff of up to 25 per cent on a further US$300 billion of Chinese goods, which would put significant further pressure on the Chinese economy. China has already retaliated by placing variable tariffs on US$60 billion of US imports.
Even before the escalation of the trade war, Chinese economic data in April was disappointing.
Retail sales growth slowed to 7.2 per cent in April – the lowest rate in 16 years – from 8.7 per cent in March, while industrial production growth slowed markedly to 5.4 per cent from 8.4 per cent. Exports fell 2.7 per cent in April compared with the same period in 2018, a sharp reversal from the 14.2 per cent rise in March.
While many private analysts expected the Chinese government to enact further 
fiscal and monetary stimulus

to offset the slowdown in growth, Beijing has so far refused to commit to doing so.

In part, the government is counting on already implemented personal and business tax cuts – including the trimming of the value-added tax rate for manufacturing firms – to gradually provide support for the economy.
Industrial profits stood at 515.39 billion yuan (US$74.7 billion) last month, down 3.7 per cent compared to a year earlier. Photo: AFP
Industrial profits stood at 515.39 billion yuan (US$74.7 billion) last month, down 3.7 per cent compared to a year earlier. Photo: AFP

The PMI rounds off a poor week for China’s economy after Monday’s industrial profits released by the NBS showed the fastest slump in almost three and a half years in April.

Industrial profits

stood at 515.39 billion yuan (US$74.7 billion) last month, down 3.7 per cent compared to a year earlier, the largest percentage decline since December 2015. With further tariffs about to kick in on

Chinese exports

, there is significant capacity for the downward trend to continue.

Fitch Ratings, in a

report earlier

this month, said that the escalation could lead to half a per cent being detracted from the Chinese economy this year, which would bring it to the lower limits of Beijing’s target growth range of between 6.0 and 6.5 per cent.

It is expected that a surge in orders will lead to a bumper month of exports in May and June as US importers and Chinese exporters attempt to front-load their stocks to beat the tariffs. 
Some exporters

are already shipping their stocks earlier, reporting has shown, as they look to manage the risk of the trade tariffs.

Source: SCMP
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19/05/2019

Four more Chinese cities warned over pace of home price growth

BEIJING (Reuters) – China’s housing regulator has urged four more cities to prevent their residential property markets from overheating in the latest sign that authorities are not about to relax their grip on the real estate business in order to spur the economy.

The cities of Suzhou, Foshan, Dalian and Nanning have been told by the Ministry of Housing and Urban-Rural Development to stabilize land and housing prices as well as market expectations, the official Xinhua news agency reported late on Saturday.

Six other cities were warned by the ministry last month to monitor the growth of home prices in their markets, after some cities, including, Foshan quietly started to relax some curbs since December to spur demand.

China’s home property market is a key plank of the economy, influencing tens of related sectors such as construction and financial services.

The sector has held up well despite a slowdown in growth in the world’s second-biggest economy, with policymakers walking a fine line between preserving stability and hurting market sentiment.

Renewed tensions between China and the United States over trade have also added pressure on Chinese policymakers to keep the domestic economy on a stable footing, while continuing to fend off risks such as housing bubbles.

Average new home prices in China’s 70 major cities rose 0.6% in April, unchanged from the pace of growth in March, according to a monthly official survey.

Most of the 70 cities surveyed by the National Bureau of Statistics still reported monthly price gains for new homes. The number increased to 67 in April from 65 in March, signaling a slight strengthening in the market.

The housing ministry reiterated that “houses are for living in, not for speculation”, according to the Xinhua news agency on Saturday.

Even before the ministry’s latest warning, the prosperous city of Suzhou, just northwest of Shanghai, had already rolled out new property curbs.

On May 11, Suzhou said it would restrict buyers of new homes in some districts from selling their property within three years.

Source: Reuters

11/03/2019

China makes substantial progress in renovating dilapidated houses

BEIJING, March 10 (Xinhua) — China has made substantial progress in renovating the dilapidated houses in rural areas, said the Ministry of Housing and Urban-Rural Development (MOHURD).

Over 6 million registered poor households have seen their dilapidated houses renovated since the country launched the “three tough battles” against major risks, poverty and pollution in November 2015, the MOHURD said.

In 2018 alone, 1.57 million registered rural poor households saw their dilapidated houses renovated, according to the National Bureau of Statistics.

China plans to renovate another 15 million units of shanty houses from 2018 to 2020 to speed up its urbanization drive and improve people’s livelihood.

Source: Xinhua

07/03/2019

China ‘exaggerated’ GDP data by 2 percentage points for at least nine years, new study says

  • Mainland has overestimated its nominal and real growth rates by about 2 full percentage points on average between 2008 to 2016
  • Calculations suggest that the current nominal size of the economy is about 18 per cent lower than the official level of US$13.4 trillion at the end of 2018

13 Feb 2019

The paper, “A Forensic Examination of China’s National Account”, was submitted to the “Brookings Papers on Economic Activity”, a journal published by the US-based Brookings Institute. Photo: EPA
The paper, “A Forensic Examination of China’s National Account”, was submitted to the “Brookings Papers on Economic Activity”, a journal published by the US-based Brookings Institute. Photo: EPA
China has overestimated its nominal and real growth rates by about 2 full percentage points on average between 2008 to 2016, with the miscalculation increasing each year, according to a new study published on Thursday.
The results indicate that the actual size of China’s economy at the end of 2018 was well below the government’s official estimate.
It also raises questions not only about the quality of economic data from the world’s second largest economy, but also the willingness of the government to take the steps necessary to accurately report information.
Using the study’s findings and applying them to government figures starting with the level of nominal gross domestic product (GDP) at the end of 2007 and the growth rate for 2008, calculations by the South China Morning Post show that the current nominal size of the Chinese economy is about 18 per cent lower than the official level of 90 trillion yuan (US$13.4 trillion) at the end of 2018.
The calculation assumes that the government’s official 2017 and 2018 nominal growth rates are overestimated by 2 percentage points, as suggested by the study.

Overestimates of growth in 2007 and previous years would further reduce the current size of the Chinese economy.

SCMP calculations show the adjusted nominal GDP level in China is about US$11.5 trillion using current exchange rates, still more than twice the size of Japan’s economy at US$5.16 trillion, but well below the economy of the United States at US$20 trillion.

The paper, “A Forensic Examination of China’s National Account”, was submitted to the “Brookings Papers on Economic Activity”, a journal published by the US-based think tank Brookings Institute twice a year on macroeconomic issues that are influencing the public policy debate. It will be formally presented in Washington on Thursday.
“Our estimates suggest that the extent by which local governments exaggerate local GDP accelerated after 2008, but the magnitude of the adjustment by the NBS did not change in tandem,” the authors said.

The study focuses primarily on nominal, non-inflation adjusted growth.

The paper comes at a sensitive time for Chinese policymakers, who are battling a slowing economy due to their campaign to reduce debt and risky lending as well as the effect of the trade war with the United States. The inflation-adjusted growth rate of 6.6 per cent last year was the slowest since 1990.

On Tuesday, the government announced that it had lowered its growth target for 2019 to a range of 6 to 6.5 per cent, down from “about 6.5 per cent” last year due to the multiple headwinds the economy is facing. The government also announced new tax cuts and additional government spending to help stabilise growth.
The paper’s four authors – Chen Wei, Chen Xilu and Michael Song from the Chinese University of Hong Kong and Chang-Tai Hsieh from the University of Chicago – used a mix of economic indicators that are less likely to have been manipulated by authorities to prove that the National Bureau of Statistics (NBS) have not done enough to correct the errors in the data collected from provincial governments over the past decade.

Our estimates suggest that the extent by which local governments exaggerate local GDP accelerated after 2008, but the magnitude of the adjustment by the NBS did not change in tandem.Report authors

It has long been believed that local Chinese officials inflate figures reflecting their economic performance, which is closely tied to their opportunity for promotion. Since 2003, the NBS has produced a national gross domestic product (GDP) figure that is lower than aggregate provincial data after examining other data such as the census and land sales.

Local statistics bureaus generally overstate industrial output as a portion of overall production as well as the size of investment within overall expenditures, the two different approaches to calculating GDP, according to the paper. The methods of data collection are often the cause, for example, calculations of investment spending have been based purely on government reports on specific projects rather than on the financial statements of the investing firms involved.

One method that the authors used to probe the accuracy of the NBS’s adjustments was comparing the growth of official GDP with the growth of revenue from value-added tax (VAT), which taxes the value added to a product at each stage of production.

Local governments have fewer incentives to manipulate VAT revenue, since a large portion of it is eventually transferred to the central government, therefore overstating VAT would only increase fiscal revenue losses.

Premier Li Keqiang confirmed China had lowered its growth target for 2019 to a range of 6 to 6.5 per cent at the National People’s Congress on Tuesday. Photo:
Premier Li Keqiang confirmed China had lowered its growth target for 2019 to a range of 6 to 6.5 per cent at the National People’s Congress on Tuesday. Photo:

Although the NBS adjusts downwards local statistics, it does not report the adjusted local statistics, perhaps out of a desire to not confront powerful local leaders.Report authors

“Although the NBS adjusts downwards local statistics, it does not report the adjusted local statistics, perhaps out of a desire to not confront powerful local leaders,” the authors said.

Since September, the NBS has named and shamed local governments on its website for manipulating data, but it remains to be seen if local governments fall in line.

In a post in January, the NBS said it had passed 14 cases of data falsification on to local governments before February 2018 but that it had not been updated even though local officials are required by law to punish those responsible for manipulating data within six months after receiving a notice of a violation.

The NBS’s ability to fix China’s GDP data problem is bound by its limited political power, the authors indicated.

“There are three problems with China’s GDP. One is that it doesn’t necessarily measure the right thing. Two is statistical bias in the way data is collected. Three is really a macro policy problem by the government which should write down all the bad debt,” said Michael Pettis, professor of finance at Peking University.

“The NBS is only trying to fix the second problem.”

Source: SCMP

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