October 23, 2012
Analysts said the improvement in the October reading reflected the effect of a steady drip of stimulus measures introduced by Beijing. A gradual improvement in overseas demand in recent months also has helped. A subindex measuring new export orders, for example, rose to a five-month high of 47.3 points as orders for the Christmas season came in.
The reading provided a “positive sign,” and “further evidence of a pickup for the fourth quarter,” economists at Australia & New Zealand Bank in Hong Kong wrote in a research note. At the same time, however, the October number was still below 50 points — the level that separates expansion from contraction, showing that the companies polled in the survey still faced considerable challenges.
Lackluster overseas demand for Chinese exports and moves last year by Beijing to dampen the rapid pace of growth and cool inflation and a red-hot property market have slowed down the Chinese economy this year. The health of the important property sector, in particular, continues to worry some analysts. They fear that many developments that were rushed out when the Chinese authorities engineered a major stimulus program in late 2008 and 2009 may ultimately go sour.
Reflecting a widespread recognition that future economic expansion is likely to be much more subdued than in the past, the International Monetary Fund and the World Bank both lowered their economic growth forecasts for China this month.
The I.M.F., for example, said it expected the Chinese economy to expand by 7.8 percent this year — a pace that easily outpaces the United States or Europe, but falls short of China’s 9.3 percent expansion in 2011, and its 10.4 percent growth rate in 2010.
For next year, the I.M.F. forecasts 8.2 percent growth in gross domestic product — in other words, a slight pickup from this year, but no return to the double-digit growth rates of the years before the global financial crisis. Economic data for September, and the HSBC index for October, underlined that view, showing that the pace of growth appeared to have stabilized and could pick up in the coming months.
Thanks to a series of recent measures to bolster the economy, in the fourth quarter of this year, “growth has likely bottomed out and is headed for a gradual recovery,” Qu Hongbin, chief China economist at HSBC, wrote.
Over the past year, the authorities have loosened lending constraints for banks in a bid to encourage more loans and have stepped up infrastructure project approvals. Two small interest rate cuts in June and July also aimed to improve growth.
The ongoing financial turmoil in Europe and the risks associated with the looming “fiscal cliff” in the United States, however, mean that the outlook remains “challenging,” Mr. Qu said.
Released Wednesday, a purchasing managers’ index for manufacturing and services businesses in the euro zone, compiled by Markit, an economic data firm, underlined his point: The preliminary reading for October fell to a 40-month low of 45.8 points, from 46.1 in September, confounding expectations for a slight rise.
A version of this article appeared in print on October 25, 2012, in The International Herald Tribune.