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Saturday, April 11, 2009

China's economy shows signs of steady recovery

BEIJING, April 10 -- The national enterprise boom index released by the National Bureau of Statistics on April 9 shows that entrepreneurial confidence has recovered. The national enterprise boom index for the first quarter of 2009 also shows signs that decreases are narrowing.

    The China Association of Automobile Manufacturers also released their latest statistics on April 10 showing that total automobile sales in China reached 2,678,800 in the first quarter, ranking China first for sales in the global auto market. Data released prior to this shows that China's PMI (Purchasing Managers Index of China's manufacturing industry) reached 52.4 in March, rallying the fourth consecutive month.


    Regarding this, Ma Jiantang, Commissioner of the National Bureau of Statistics, said that the continuous rally of the PMI and the positive changes he experienced during an investigation and research tour to various regions indicate that China's economy has probably stabilized for a recovery. He also said that these factors provided sound evidence that the Central Government's stimulus plan for expanding domestic demand, boosting growth, encouraging structural adjustment, deepening reform and improving people's well-being has had a remarkable effect.

    The PMI is regarded as being a leading indicator that rapidly reflects market dynamics in a timely way. It is generally believed that when the PMI is above 50, it indicates that the overall manufacturing sector is expanding, while below 50 indicates that the overall manufacturing sector is contracting. Since December last year, the PMI has increased for four consecutive months, reaching 52.4 in March.

    In the real estate sector, starting this year, the transaction volumes for real estate markets of major cities, including Beijing, Shanghai, Tianjin and Guangzhou, have all achieved relatively large increases. However, experts within the industry believe that further observation should be made to judge whether the real estate market has completely recovered.

    In the first three months of this year, domestic passenger transportation volume in the civil aviation sector increased respectively by 21 percent, 13 percent and 14 percent year-on-year, back to double-digit increases for the first time since March 2008. In 2008, the whole civil aviation industry lost a total of 25.2 billion yuan. However, in the first quarter of this year, on the whole, China's domestic airlines once again started to make a profit, with a total profit of 800 million yuan, according to preliminary statistics.

    On April 8, Li Jiaxiang, Director-General of the Civil Aviation Administration of China, said that the operations of China's civil aviation sector have fully recovered and larger breakthroughs are expected in the domestic civil aviation market in April and May.

    The latest data from ports also reflects a new trend in China's economy. In the first quarter this year, operations of China's ports above a certain scale remained in a downturn. In March, however, signs emerged that operations have started to stabilize and bottom out.

    According to preliminary statistics, the throughput of China's ports was up by two percent in March this year. The amount of coal shipped through ports reached around 40 million tons, close to normal levels, while the amount of iron ore imported stood at 51 million tons, setting a new monthly and quarterly record. Affected by the macro environment of the world economy, container throughput for foreign trade continued to demonstrate a downward trend and depressed conditions, however, its rate of decline demonstrated a noticeable slowdown.

    While there was continued downturn in the global auto market, China's auto market experienced brisk production and sales. In March, the US auto market sold 858,000 cars, down 37 percent year-on-year, and in the Japanese auto market 323,000 cars were sold, down 32 percent year-on-year.

    Meanwhile, China's auto sales reached 1,109,800, an increase of 5.01 percent compared to the same period last year, and exceeding the US and Japan for the third month in a row. In particular, continued positive markets for small-engine cars indicate that the country's policies, such as a 50 percent tax reduction on purchases of small-engine vehicles with 1.6-liter capacity engines and below as well as the "Automobiles to the Countryside" program, have achieved noticeable results.

    According to the analysis of Zhu Baoliang, Deputy Director of the Economic Forecast Department of the State Information Center, after making all-round observations of these indicators, although he is unable to reach the conclusion that the economy has already recovered, he believes that the economy's downward trend has stopped. "The worst period has passed. As the government continues to increase investment, favorable factors for economic recovery are being accumulated and are increasing. The economy will show a remarkable rally in the second half of this year."