Page 18 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
speculation takes hold that the worst of the crackdown percent in the January-July period, down from an 8.5
may be over. To market watchers from Pacific Investment percent rate posted for the first six months of the year
Management Co. to Australia & New Zealand Banking and marking the lowest level since 2016’s annual rate
Group Ltd. and Standard Chartered Plc, that’s a hit 6.9 percent. The floor space for residential housing
concern—not least because the efforts so far have barely starts in July fell 3 percent year-on-year, down from a
budged leverage levels. “The market should be more 14.4 percent gain in June and the first decline since
cautious, as such complacency is not what policy makers September 2016. New starts activity drives demand for
want to see,” said Ding Shuang, Chief China Economist construction materials such as cement, glass and steel.
at Standard Chartered in Hong Kong. “The government Meanwhile, residential building sales in terms of floor
won’t easily give up on deleveraging. It still has a way to space edged up 0.3 percent in July from the previous
go.” Xi said that the central bank would play a stronger year, the weakest reading since a drop of nearly 1
role in defending against risks, calling for more work percent registered in March 2015, according to Caixin.
on safeguarding the financial system and modernizing As a result, cement production fell 0.9 percent year-on-
its regulatory framework. Authorities will proactively year in July, which tied June’s reading as the weakest so
prevent and resolve systemic financial risks, and step up far this year. Plate glass output rose 3.2 percent in July
efforts to reduce leverage in the economy, the official from a year ago, the slowest pace since September 2016.
Xinhua News Agency reported (Chen and Yang). Housing-related spending also slowed in July, with the
increase in retail sales of furniture dipping to the lowest
China’s economy got off to a slow start in the level in five months and home appliance sales softening
third quarter of 2017, with key indicators gauging to the weakest point since April. But steel output soared
factory activity and mining, investment and general 10.3 percent last month from a year ago, the fastest pace
consumption falling in July to their lowest levels in since 11 percent in September 2013, as steel-makers
months. Industrial output rose 6.4 percent in July from revved up production to take advantage of a spike in
2016, the lowest expansion rate in five months. Fixed- prices for their products. Still, most analysts doubt the
asset investment excluding rural households was up latest boosts in stronger business sectors such as steel
8.3 percent in the January-July period year-on-year, the can be sustained (Wang).
weakest growth pace for multiple-month periods to that
point in 2017 and came in below the polled economists’ In August 2017, The National Bureau of Statistics of
median forecast of an 8.6 percent increase. Retail sales China (NBS) noted “quite a few underlying concerns”
(including spending by households, government faced the country ’s growth prospects, such as a
agencies and businesses, but exclude spending on “complicated and volatile” international environment
services) rose 10.4 percent in July year-on-year. That was and “prominent domestic structural problems.” Fears
the lowest rate of increase since the January-February were growing that strained trade tensions between
period and fell short of the median growth estimate of China and the United States could deteriorate, after
10.8 percent. Analysts said the cooling trend reflected in the Sino-U.S. Comprehensive Economic Dialogue in
the July figures had an impact on the global economy July yielded few results. US media reported that the
against the backdrop of Chinese government policy White House was preparing to open an investigation
decisions and international trade tensions. A chilly into alleged Chinese violations of American intellectual
climate for the nation’s real estate sector was a leading property, amid frustration over what Washington saw
factor behind the loss of momentum in July, analysts as insufficient efforts by Beijing to pressure North Korea
said. The government’s tightening of home-purchasing over its nuclear and ballistic missile programs. Chinese
rules (including higher down payment requirements, government campaigns to cut excess industrial capacity
mortgage rate hikes and a slowdown in the issuance and deleverage, as well as measures aimed at reining
pace for home-sales permits) left numerous consumers in soaring home prices, have also fueled concerns that
in the cold by freezing transactions in many cities. policy adjustments could weigh on economic growth.
Also cooling was infrastructure investment, another President Xi said authorities would prioritize efforts to
key means of support for economic growth that’s curb credit risks facing state-owned enterprises. He said
mainly driven by government spending. Infrastructure the government was determined to let money-losing,
investment growth fell to 20.9 percent in the January- debt-laden “zombie” companies fail and also vowed to
July period from 21.1 percent for the first six months strictly control local government debt and continue
of the year. Property investment growth slowed to 7.9 strengthening oversight of risky operations in the
18
speculation takes hold that the worst of the crackdown percent in the January-July period, down from an 8.5
may be over. To market watchers from Pacific Investment percent rate posted for the first six months of the year
Management Co. to Australia & New Zealand Banking and marking the lowest level since 2016’s annual rate
Group Ltd. and Standard Chartered Plc, that’s a hit 6.9 percent. The floor space for residential housing
concern—not least because the efforts so far have barely starts in July fell 3 percent year-on-year, down from a
budged leverage levels. “The market should be more 14.4 percent gain in June and the first decline since
cautious, as such complacency is not what policy makers September 2016. New starts activity drives demand for
want to see,” said Ding Shuang, Chief China Economist construction materials such as cement, glass and steel.
at Standard Chartered in Hong Kong. “The government Meanwhile, residential building sales in terms of floor
won’t easily give up on deleveraging. It still has a way to space edged up 0.3 percent in July from the previous
go.” Xi said that the central bank would play a stronger year, the weakest reading since a drop of nearly 1
role in defending against risks, calling for more work percent registered in March 2015, according to Caixin.
on safeguarding the financial system and modernizing As a result, cement production fell 0.9 percent year-on-
its regulatory framework. Authorities will proactively year in July, which tied June’s reading as the weakest so
prevent and resolve systemic financial risks, and step up far this year. Plate glass output rose 3.2 percent in July
efforts to reduce leverage in the economy, the official from a year ago, the slowest pace since September 2016.
Xinhua News Agency reported (Chen and Yang). Housing-related spending also slowed in July, with the
increase in retail sales of furniture dipping to the lowest
China’s economy got off to a slow start in the level in five months and home appliance sales softening
third quarter of 2017, with key indicators gauging to the weakest point since April. But steel output soared
factory activity and mining, investment and general 10.3 percent last month from a year ago, the fastest pace
consumption falling in July to their lowest levels in since 11 percent in September 2013, as steel-makers
months. Industrial output rose 6.4 percent in July from revved up production to take advantage of a spike in
2016, the lowest expansion rate in five months. Fixed- prices for their products. Still, most analysts doubt the
asset investment excluding rural households was up latest boosts in stronger business sectors such as steel
8.3 percent in the January-July period year-on-year, the can be sustained (Wang).
weakest growth pace for multiple-month periods to that
point in 2017 and came in below the polled economists’ In August 2017, The National Bureau of Statistics of
median forecast of an 8.6 percent increase. Retail sales China (NBS) noted “quite a few underlying concerns”
(including spending by households, government faced the country ’s growth prospects, such as a
agencies and businesses, but exclude spending on “complicated and volatile” international environment
services) rose 10.4 percent in July year-on-year. That was and “prominent domestic structural problems.” Fears
the lowest rate of increase since the January-February were growing that strained trade tensions between
period and fell short of the median growth estimate of China and the United States could deteriorate, after
10.8 percent. Analysts said the cooling trend reflected in the Sino-U.S. Comprehensive Economic Dialogue in
the July figures had an impact on the global economy July yielded few results. US media reported that the
against the backdrop of Chinese government policy White House was preparing to open an investigation
decisions and international trade tensions. A chilly into alleged Chinese violations of American intellectual
climate for the nation’s real estate sector was a leading property, amid frustration over what Washington saw
factor behind the loss of momentum in July, analysts as insufficient efforts by Beijing to pressure North Korea
said. The government’s tightening of home-purchasing over its nuclear and ballistic missile programs. Chinese
rules (including higher down payment requirements, government campaigns to cut excess industrial capacity
mortgage rate hikes and a slowdown in the issuance and deleverage, as well as measures aimed at reining
pace for home-sales permits) left numerous consumers in soaring home prices, have also fueled concerns that
in the cold by freezing transactions in many cities. policy adjustments could weigh on economic growth.
Also cooling was infrastructure investment, another President Xi said authorities would prioritize efforts to
key means of support for economic growth that’s curb credit risks facing state-owned enterprises. He said
mainly driven by government spending. Infrastructure the government was determined to let money-losing,
investment growth fell to 20.9 percent in the January- debt-laden “zombie” companies fail and also vowed to
July period from 21.1 percent for the first six months strictly control local government debt and continue
of the year. Property investment growth slowed to 7.9 strengthening oversight of risky operations in the
18
