China Feb services activity jumps sharply as demand recovers- Caixin PMI
BEIJING, March 3 (Reuters)
Activity in China’s services sector expanded at the fastest pace in six months in February as the removal of tough COVID-19 restrictions revived customer demand, driving a solid increase in employment, a private sector survey showed on Friday. The Caixin/S&P Global services purchasing managers’ index (PMI) rose to 55.0 in February from 52.9 in January, a back-to-back monthly increase in activity after the government abruptly dismantled anti-virus measures in December. The 50-point mark separates expansion and contraction in activity on a monthly basis. The reading tallies with an official services PMI released on Wednesday, suggesting a robust recovery in the sector is well under way. Service companies reported the strongest rise in new business since April 2021, while new export order growth accelerated to the highest in almost four years, the Caixin survey showed.
The improvement in market conditions also drove a strong increase in employment. Firms started to take on additional workers for the first time in four months and the rate of job creation was the sharpest since November 2020 as spending and travel got a boost. China’s human resources minister Wang Xiaoping said on Thursday that the country’s job market was better than expected in January and February.
Commerce minister Wang Wentao also said on Thursday that the country’s consumption has rebounded significantly this year, with major shopping areas and the catering sector surging remarkably. Thanks to the COVID reopening, business confidence across China’s services sector remained robust last month, though the degree of optimism slipped slightly from January’s near 12-year highs. “The economy has entered a post-COVID recovery, with services activity showing signs of a stronger recovery than the manufacturing sector,” said Wang Zhe, an economist at Caixin Insight Group. “But the impact of the pandemic remains far-reaching.” “In the near term, relevant policies should focus more on increasing household income and improving market expectations.”
Caixin/S&P’s composite PMI, which includes both manufacturing and services activity, rose to 54.2 in February from 51.1 a month earlier, marking the quickest expansion since June. China is becoming increasingly ambitious with its 2023 economic growth target, aiming potentially as high as 6%, in a bid to boost investor and consumer confidence and build on a promising post-pandemic recovery, Reuters reported on Thursday, citing sources involved in policy discussions. The final growth target will be announced on March 5, at the start of China’s annual legislative meeting
China sets GDP target of ‘around 5%’ for 2023
- China set a growth target of “around 5%” for 2023, according to Premier Li Keqiang’s government work report released Sunday.
- China also set a goal of 3% for the consumer price index, and a 5.5% unemployment rate for people in cities — with the creation of around 12 million new urban jobs.
- The work report called for implementing “prudent monetary policy” in a “targeted” way.
BEIJING — China set a growth target of “around 5%” for 2023, according to Premier Li Keqiang’s government work report released Sunday. Analysts generally expected China to set a GDP target of above 5% for 2023. The average forecast for growth is 5.24%, according to CNBC analysis. China also set a goal of 3% for the consumer price index, and a 5.5% unemployment rate for people in cities — with the creation of around 12 million new urban jobs. That’s more than last year’s target of “over 11 million.” The work report called for implementing “prudent monetary policy” in a “targeted” way. The deficit-to-GDP ratio is expected to increase to 3% from 2.8% last year, the report said. Li presented the report Sunday at the opening of the National People’s Congress, part of the annual “Two Sessions” parliamentary meeting. This is his last such congress as premier. The work report noted the coming change in central government leadership, while laying out eight priorities for economic policy.
Spurring domestic demand — from consumption and investment — ranked first, followed by improving the industrial system and supporting non-state-owned enterprises, according to the report. Other priorities included “intensifying efforts to attract and utilize foreign investment,” “preventing and defusing” financial risks, stabilizing grain production, continuing green development and developing social programs. “We should strive to develop the digital economy, step up regular oversight, and support the development of the platform economy,” the report said in English. While it did not name specific companies, internet tech companies such as Alibaba typically fall under the “platform economy,” which has been subject to increased scrutiny from Beijing in the last few years.
On real estate, the work report called for supporting people in buying their first homes and to “help resolve the housing problems of new urban residents and young people.” “We should ensure effective risk prevention and mitigation in high-quality, leading real estate enterprises, help them improve debt-to-asset ratios, and prevent unregulated expansion in the real estate market to promote stable development of the real estate sector,” the report said. A slump in the massive property sector has weighed on China’s economic growth in the last year. Beijing cracked down on developers’ high reliance on debt for growth in 2020. China’s real estate policy will likely support high-quality real estate companies’ reasonable financing needs, and guide them toward areas of sustainable growth, said Bruce Pang, chief economist and head of research for Greater China at JLL.
On the other hand, developers “that cannot tak China’s GDP only rose by 3% last year in a rare miss of the national goal. The country had set a target of around 5.5% growth for 2022. But Covid controls, including the two-month lockdown of Shanghai, and the real estate slump dragged down growth. This year, the Two Sessions is also set to formalize government titles for the new premier, vice premiers and heads of different ministries. This year’s National People’s Congress is set to end on March 13. “Given the complete reshuffling of the government, a key issue to watch in the next few months is how the new leaders will boost private sector confidence,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management. “This is more important than the fiscal and monetary policies, in my view.”