Improvement in Economic Restructuring Help Boost the Chinese Economy

Improvement in Economic Restructuring Help Boost the Chinese EconomyEven with the slight easing of the growth momentum as seen in the April economic data, the Chinese economy is showing continued improvement in its restructuring. The yer on year growth of fixed asset investment, retail sales and industrial production all cooled during the month of April after its recovery during the first quarter, but based on month on month terms, all growth were on the positive side and importantly there are encouraging changes in the growth structure.

Year on year growth of fixed assets investment have eased 10.5 percent ot 13.26 trillion yuan from January until April a decrease from the 10.7 percent growth in the first quarter, and on a month on month basis fixed asset investment expanded 0.7 percent in April. The same month, industrial production has registered a year on year growth of 6 percent a decrease of 0.8 percentage points compared to March. Retail sales increased by 10.1 percent for April a year on year 0.4 percentage points decrease from March and a month on month retail sales growth of 0.8 percent.

A senior statistician stated that the slower year on year fixed asset investment is caused by a weaker investment growth in infrastructure which is also manufacturing is tapped by weak demand and over capacity problems which remains severe. Despite falling year on year growth of indicators and structural improvement become apparent with efforts in fostering new growth engines in both the domestic and external demand has weaken. Money that is invested in industrial technology upgrades in manufacturing has increased by 15.8 percent for the first four months or 8.5 percentage points higher that the overall industrial investment. Investment of consumer goods manufacturing have increased by 10 percent year on year for the first quarter that is 4 percentage points higher than all of manufacturing investment which is in line with restructuring strategies.

The government might not further ease the monetary policy in response to the new data, they might need to wait for a couple of months to see the new engines to pick up. A temporary slowdown that is shown by monthly data is also raising concerns over the stabilizing trend in the second largest economy, moving away from an inefficient led model and to shift towards a consumption driven pattern.

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