It's Too Early to Say a New Economic Growth Cycle Has Started in China, PBOC Counselor Says
Yicai Global
DATE:  Jul 17 2017
/ SOURCE:  Yicai
It's Too Early to Say a New Economic Growth Cycle Has Started in China, PBOC Counselor Says It's Too Early to Say a New Economic Growth Cycle Has Started in China, PBOC Counselor Says

(Yicai Global) July 17 -- While economic data has generally been optimistic and indicated that China's development has remained stable, it is too early to say that a new growth cycle has begun, a leading expert at the Chinese central bank said of the latest government economic statistics.

The data for June were relatively strong, but people should wait for information from July and August as an upward trend can only be established if statistics continue to be healthy in the next couple of months and the June numbers from last year were weak across the board, Zhongxin Jingwei, a mobile news app developed by China News Service, quoted People's Bank of China Counselor Sheng Songcheng as saying.

The purchasing manager index (PMI) for the manufacturing industry rose 0.5 percentage points in June to 51.7 percent, a year-on-year increase of 1.7 percentage points. This marked the second highest monthly growth this year.

The manufacturing PMI is comprised of at least 15 indicators, he said. Of them, finished product inventory declined, suggesting that there will be room for further restocking and that the economy may continue to pick up in the second half.

The profit of large industrial companies was up 16.7 percent year-on-year in May, an increase of 2.7 percentage points in profit growth compared with the previous month.

Imports and exports improved in June, he said. The value of exports grew 11.3 percent in the month, which is 3 percentage points and 17.9 percent points higher than the rates recorded in the previous month and June last year, respectively. The value of imports rose 17.2 percent, outstripping the records for the previous month and June last year by 2.7 percent points and 26.1 percentage points, respectively.

Import growth has outpaced export growth in recent months, but foreign trade has remained in the black, indicating demand has been strong on the domestic market, Sheng said. This also explains stabilizing exchange rates of the yuan and an increase in foreign reserves. As of the end of June, the yuan's exchange rate against the dollar made its way into the 6.8 to 6.7 range, and foreign exchange reserves rebounded for the fifth month in a row to USD3.06 trillion.

The Federal Reserve hiked interest rates in June, but China's central bank did not follow suit because it moved ahead of the curve by raising market rates in advance, Sheng said.

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Keywords:   Economy Data,Central Bank