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Better Outlook Expected for China's 2013 Economy
industry news
Jan 14,2013

BEIJING, Jan. 14 (Xinhuanet) -- More government measures and reforms coming together with picking up external demand will bring China's economy a better outlook for the year of 2013.

Official Data Suggests Turnaround
Official data has suggested that China's economy will pick up in 2013 as the government announced last Thursday that exports gained 14.1 percent in December from one year earlier, up from November's unexpectedly weak 2.9-percent rise. The value of imports rose 6 percent year on year the same month as against November's zero growth.

China's General Administration of Customs spokesman Zheng Yuesheng said global economies have launched stimulus policies to prevent growth rates from slumping, adding that China's domestic efforts to boost the growth of foreign trade will have more visible effects this year.

Combined with other strengthening indicators, including industrial profits and output figures and a preliminary HSBC reading on December's manufacturing activity, the picture has made many hopeful for an economic turnaround.

Meanwhile, the China Association of Automobile Manufacturers (CAAM) said in a statement posted on its website last Friday that the country's auto sales last year hit 19.31 million units, up 4.33 percent year on year and marking a new high.

"Automobile production in China has exceeded 18 million units for three years in a row, showing that the industry has entered a stage of steady growth at a relatively high level," the CAAM said.

Meanwhile China's auto exports maintained a momentum of strong growth last year, with a total of 1.06 million complete vehicles exported, up 29.7 percent from a year earlier, according to the CAAM.

The National Bureau of Statistics (NBS) announced last Friday that China's consumer price index (CPI), a main gauge of inflation, grew 2.5 percent year on year in December, the fastest pace since June.

The inflation rate increased from 2 percent in November and 1.7 percent in October as food prices increased. On a month-on-month basis, December's CPI rose 0.8 percent.

Although this data is not upbeat, experts believe that it won't hurt the hopeful prospect of the economy.

"The notable jump in December's CPI was largely attributable to a surge in food costs, especially vegetable prices," said Yu Qiumei, a senior statistician with the bureau.

China is experiencing an unusual cold winter, with national average temperatures reaching a 28-year low. Persistent icy weather has wreaked havoc in south China, disrupting traffic, damaging power facilities and affecting agricultural production.

Wang Jun, an expert with the China Center for International Economic Exchanges, suggested the government stay vigilant against inflation, but ruled out the possibility of hyperinflation this year as the economy is undergoing a mild recovery and many industries will continue to face oversupply woes.

More Government Measures and Reforms Come into Play
The government targeted an economic growth of 7.5 percent last year, a decrease from the 2011 target of 8 percent.

Authorities have vowed to focus on high-quality and efficient growth this year, as well as make efforts to ensure sustainable and healthy development.

The government sped up approvals for the construction of new highways, ports, railways and sewage networks in the second half of 2012, with investment in such projects greenlighted by the country's top economic planner exceeding 5 trillion yuan (795 billion U.S. dollars) in the third quarter.

Local governments will boost urbanization, a major driver of growth advocated by Chinese leaders, to generate stronger investment demand this year, said Lian Ping, chief economist at China's Bank of Communications.

In addition, anticipated reforms for the income distribution mechanism and structural tax cuts will likely create more domestic consumption, Lian said.

A steady recovery in 2013 will create more room for the government to transform the country's economic development pattern, as it will offset the negative side effects of stimulus measures, Lian said.

China's 2013 Outlook Optimistic
China's economic growth in 2013 would be stabilized and outperform that of 2012 and the country should accelerate economic reforms, according to a group of renowned economists.

The Chinese economy would grow at 8-8.5 percent this year, faster than in 2012 and with inflation under control, Justin Yifu Lin, former vice president and chief economist of the World Bank, said during a forum on China's economic forecast jointly held by the National Committee on U.S.-China Relations and China Center for Economic Research.

Lin said investment would continue to be a strong driving force, adding that households' income and domestic consumption would also expand rapidly.

He is also confident that China could maintain an average growth rate of 8 percent in the next 20 years as there are still great potentials in industrial upgrading and infrastructure investment.

Lu Feng, director of China Macroeconomic Research Center predicted China's economy would grow 8.1-8.2 percent this year based on growth forecasts by research institutions.

As for investment strategies in China, Huang Haizhou, chief strategist at China's International Capital Cooperation (CICC), said the Chinese market would improve this year with two rounds of rally. The first round will likely occur in the first quarter and the second one in the second half of the year, with new economic programs launched and the United States, China's second largest trade partner, picking up growth momentum.

For the whole year, he predicted the A-share would rise 15-20 percent, and the magnitude may be bigger if other factors, such as stronger money injection by the central bank and milder regulations on bank bars, come in.

Huang said that while China's contribution to the world's GDP is growing larger, its contribution to the global capital market would also catch up.

On the other hand, a slight improvement in the world economy will contribute to mildly stronger growth in exports this year, as the financial situation in the EU is expected to stabilize, while the U.S. and emerging markets will recover somewhat, Lian Ping, chief economist at China's Bank of Communications, said.

"The economy will grow briskly in 2013 if we look at the infrastructure projects fast-tracked by the government in recent months and the momentum of economic reforms," he said.

Zhuang Jian, a senior economist with the Asian Development Bank, echoes by noting China's growth bottomed out in the third quarter of 2012 and will pick up due to increased infrastructure construction and frequent open market operations by the central bank.

However there remain some uncertainties for the economy's recovery, as the export outlook is still not so sure and higher inflationary pressure remains, Zhuang said.

"However, compared with last year, this year will see slightly better performance, with both domestic and external demand picking up a bit," he said. "Economic growth will at least continue on an upward trajectory in the first half."



China's economy
China economic outlook
China government measures
China 2013 outlook
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