Strong services, effective COVID control, policy fine-tuning help stabilize growth
China's economy is likely to gain a firmer footing in the remainder of the year amid improved COVID-19 control situation and expected policy fine-tuning that will give more priority to stabilizing economic growth, experts said on Friday.
They commented after a private survey showed that the country's services sector made a strong comeback last month as the resurgence in local COVID-19 cases abated, pointing to the resilience of China's economic recovery.
The Caixin China General Services Purchasing Managers' Index came in at 53.4 in September, up from 46.7 in August, driven by a solid rise in sales and output amid a contained COVID-19 situation, media group Caixin said in a report on Friday.
A PMI reading above 50 signals expansion in activities, while one below the level points to contraction.
Shao Yu, chief economist at Shanghai-listed Orient Securities, said the rebound in services activity shows that the economy is shaking off short-term disruptions like the resurgence in COVID-19 and heavy rainfall in some parts of the country.
The fading of transitory disruptions will combine with strengthening macro policy supports and policy adjustments to stabilize the supply of energy and commodities to shore up the economy, Shao said.
"There is ample impetus for the economy to stabilize and revive in the fourth quarter," he said, adding that policy aids to facilitate the financing of small and medium-sized enterprises may also be ramped up and boost manufacturers' investment behavior and credit expansion.
According to Shao, with economic downside pressure having intensified in the third quarter, policymakers may give more heft than before to stabilizing economic growth among other policy objectives, such as controlling energy consumption and defusing financial risks.
His views echoed those expressed at an executive meeting of the State Council, China's Cabinet, late last month. The meeting had pledged further efforts to keep the economy running steadily and more measures to guarantee supplies of electricity and natural gas during the coming winter.
Experts said China's economic growth may have slowed to about 5 percent year-on-year in the third quarter, versus 7.9 percent in the second one, due to a higher comparison base, domestic COVID-19 cases, elevated raw material prices, energy-related restrictions on industrial capacity and a slowing property sector.
With policymakers expected to put more emphasis on economic and supply chain stability, the country's GDP growth may recover to 5.6 percent on the two-year average basis in the fourth quarter, up from a projected 5 percent in the third one, a CITIC Securities report said.
Accelerating fixed-asset investments in manufacturing and infrastructure sectors and reviving consumer activity may become key drivers of the economy in the fourth quarter, the report said.
The Caixin report has pointed to businesses' confidence in the current economic conditions. The gauge of business expectations rose further in the expansion territory last month, though still below its long-term average, with surveyed enterprises expressing confidence that the epidemic will continue to be effectively controlled.
Liang Rui, vice-president of Sunwoda, a Shenzhen, Guangdong province-based manufacturer of lithium batteries, also said supportive policies for the private sector and smaller businesses have boosted the company's development prospects.
"China has launched many supportive policies for private firms and strives to offer a better business environment. Such supports allowed Sunwoda to access more funds and boost its technological resilience," Liang said.