’14 Numbers of the year
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THE Chinese government kept to its commitment to continue trying to rebalance the economy and reform financial markets. It is seeking to reduce dependence on exports, bring order to infrastructure spending, keep a rein on property speculation, increase personal consumption, promote technology and other non-polluting industries, and address the mounting debt risk of local governments and their special financing vehicles.
Gross domestic product this year is expected to be the slowest since 1999.
It’s a tough balancing act in such a vast economy. Considered a key transition year by many, 2014 is ending with a question mark. After 35 years of unprecedented growth, where is the world’s second-largest economy headed and what will it mean for the global economy?
Despite the slowdown, there are bright spots. Living standards have continued to rise across the country. Online retailing has fostered a boom in consumer spending. On Alibaba’s Singles Day sales promotion on November 11, consumers spent a record 57.1 billion yuan (US$9.2 billion).
The stock market, which was moribund for most of the year, showed signs of picking up in the first two weeks of December. The benchmark CSI 300 index has risen more than a quarter in the past month, giving investors some respite from months of poor returns.
Shanghai Daily has picked through the numbers that highlight a complicated year.
Growth: 7.4%
In the first three quarters of this year, China’s GDP grew 7.4 percent, slightly below the official target of 7.5 percent. Many analysts have been reducing their forecasts for full-year growth, especially after disappointing manufacturing data. The Asian Development Bank recently cut its 2014 growth to 7.4 percent from 7.5 percent, and estimates 2015 expansion at only 7.2 percent.
The HSBC Flash China Manufacturing Purchasing Managers’ Index, the earliest available indicator of China’s industrial sector, hit 49.5 in December, down from 50 in November. Numbers below 50 indicate contraction.
Still, there are signs that the slowdown remains within manageable parameters.
In November, industrial production grew 7.2 percent, down from the rise of 7.7 percent in October. The Consumer Price Index was up 1.4 percent from a year earlier, the slowest price gain in more than five years. Producer prices, which track wholesale inflation, fell 2.7 percent after a decline of 2.2 percent in October.
“China’s economy is showing more signs of stabilization toward the end of the year,” Li Maoyu, an analyst at Changjiang Securities, told Shanghai Daily. “The economy is bolstered by growing demand, both at home and abroad, as evidenced in sectors such as retail, logistics and hospitality.”
Economists are closely watching monthly data to gauge whether authorities will see a need for more stimulus or stand pat.
Equity investment: US$9.9 billion
The China Securities Regulatory Commission lifted its ban on domestic initial public offerings at the start of this year, fanning fears of a glut of new securities. As of the end of November, 104 new companies had raised US$9.9 billion in equity sales and began trading on the Shanghai and Shenzhen exchanges.
The stock market languished most of the year, as concern about lax regulatory oversight continued to rattle buyer confidence.
That began to change in November, when the central bank delivered a surprise interest rate cut and the new Shanghai-Hong Kong Stock Connect was launched, allowing some direct trading between both exchanges.
The Shanghai Composite Index rose to a 44-month high, regaining the 3,000-point mark, and trading volumes jumped.
In the US, 15 Chinese companies, including e-commerce giant Alibaba, raised a total of $30.45 billion in IPOs this year, easing overseas skepticism about the viability of Chinese issuers. Alibaba’s $25 billion issue was the world’s largest. The shares have risen about 60 percent since their September debut.
Online commerce: 42.3 billion
Online shopping and finance chalked up rapid growth in 2014, showing strong purchasing power, especially among those aged 18 to 35.
Alipay, the online payment arm of Alibaba, said earlier this month that it has recorded 42.3 billion transactions since 2004.
Alipay’s popular cash management product Yu’ebao, which is less than a year old, reports that users doubled from a year earlier to 149 million, despite a drop in the annual return from 7 percent to just above 4 percent.
Among the 149 million users, 44 percent were born in the decade of the 1980s and a third were born after 1990.
Internet finance, including peer-to-peer lending, is providing a new channel of investment for Chinese with spare cash. Baidu, NetEase, Suning and other companies have started online money market funds, in competition with banks.
Some people worry that Internet finance has grown too rapidly, without sufficient oversight, and poses a threat to economic stability. The People’s Bank of China is working to improve regulatory controls.
In another development, the China Banking Regulatory Commission recently gave approval to Shanghai-based private lender Webank to open its door. Its business scope includes personal, corporate and international banking.
In the third quarter of this year, the commission approved the establishment of five privately owned banks in an effort to boost lending to cash-starved smaller businesses.
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