A large advertisement promoting China’s “trade-in” policy hangs outside a housing construction project in Nanjing, China on November 29, 2024.
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China’s recent efforts to kickstart growth have yet to have a broader impact, data and company earnings show, suggesting the world’s second-largest economy won’t be roaring back anytime soon.
Growth in pockets From real estate to manufacturing, Beijing has improved since it began announcing stimulus measures in late September. However, the companies have maintained a cautious tone while sharing views over the past few weeks.
The food delivery giant was asked on an earnings call on Friday about the impact of the stimulus Maituan In October, it said the average hotel order value in its new travel booking business was lower year-over-year than in previous months.
“Although the positive impact will take some time to fully materialize and further (extend) to higher consumption categories, we are confident that these policies will gradually provide more support to the real economy and encourage consumer spending and bring more growth opportunities to our business,” Meituan said, according to the earnings call recording. said Shaohui Chen, CFO and Senior Vice President.
An executive of an e-commerce company Alibaba and social media operator Tencent He shared similar comments on his earnings call last month, saying the stimulus was encouraging Take time to translate into growth.
The ramp-up in stimulus measures is aimed at reaching the official target of around 5% this year and a similar pace next year – while preventing financial instability, Teneo’s managing director Gabriel Wildau said in a note on Monday. For him, the tone on the economy suggests that “technological self-reliance and national security are top priorities” for China.
“Looking ahead, our sources expect the stimulus to emerge in 2025 in an incremental and data-dependent fashion,” Wildau said. “Instead of ‘just enough’ the guiding principle is ‘what it takes’.”
November’s preliminary economic indicators reinforce a picture of improving, but not explosive, growth.
The Kaixin Purchasing Manager’s Index for Manufacturing LSEG data showed further expansion in factory activity with a print of 51.5, its highest reading since June. Official PMI came to 50.3The highest since April. November retail sales and industrial data are due on December 16.
Caixin’s measure of manufacturing workers showed employment contracted for the third consecutive month in November. That suggests “the impact of economic stimulus has yet to be felt in the labor market and businesses’ confidence in expanding the workforce needs to be strengthened,” said Wang Zhe, senior economist at Caixin Insight Group. Said in the report.
“Although the economic downturn appears to be subsiding, it needs further consolidation,” Wang said, noting the growing risk of “external uncertainties”.
The US issued another round on Monday Restrictions Aimed at undercutting Chinese chipmakers. President-elect Donald Trump announced plans to impose it last week 10% tariffs on all US imports of Chinese goods Once he took office in January.
“Markets are only salivating for more stimulus as geopolitical temperatures rise,” according to a survey by US-based consultancy China Beige Book on Chinese affairs released on Monday.
The firm surveyed 1,502 companies from Nov. 14 to Nov. 26 and found that retail spending improved from a year ago, along with home sales, despite “widespread” weakness in services usage. The report noted that the share of heavy borrowers rose to the highest level since May 2022, indicating a pickup in demand.
“Beijing’s stimulus measures encouraged firms to come off the sidelines this month,” the report said. “But it is unlikely to remain without pledges of additional support.”
China’s finance ministry said more financial aid could come next year. Investors are watching for details of China’s annual economic planning meeting, usually held in mid-December.
