China, eager for ‘good start’, tells regions to limit Lunar New Year’s drag on economy

China’s Ministry of Industry and Information Technology gathered the leaders of several regions to call for robust industrial growth in the new year
Officials want ‘good start’ to year as concerns still loom over the pace of economic recovery

China manufacturing

Luna Sunin Beijing

Published: 9:00pm, 5 Feb, 2024

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Fourteen Chinese regions have been tasked by the Ministry of Industry and Information Technology to stabilise manufacturing and ensure a good start to the year, as the sector faces unabating headwinds in the run-up to the Lunar New Year holiday.

At a meeting held by the ministry for officials from major economic centres, efforts were also urged to mitigate disruptions from the impending holiday and support companies in their explorations of external markets.

“Various measures will be taken to support enterprises in maintaining stable production and employment, ensuring a good start and positive momentum in the industrial economy for the first quarter,” the ministry said in an official WeChat post published on Sunday.

“Efforts will be fully dedicated to expanding market demand, promoting holiday spending [and] cultivating new sources of consumption growth.”

The gathering underscores Beijing’s hope to start the year off strong, after China’s economy grew by only 5.2 per cent last year and economists have warned of a wobbly recovery to come.

China’s industrial sector has thus been closely watched. As manufacturers struggle with waning overseas orders and weak domestic demand, a protracted local government debt crisis and a slump in the property sector have compounded the problem.

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The manufacturing purchasing managers’ index (PMI) reading for the world’s second-largest economy has remained below 50, indicating contraction, for four consecutive months – although January’s PMI rebounded slightly to 49.2 from 49 in December.

The meeting, held in Xi’an in the central province of Shaanxi, included leaders from 13 other provinces and the municipality of Chongqing. Those there represented some of the country’s most developed regions, including Jiangsu, Zhejiang and Guangdong.

Assistance and services were promised for struggling industries and small and medium-sized enterprises, and supplies were guaranteed to handle extreme weather such as the snowstorms, freezing rain and heavy rainfall expected to affect much of the country during the holiday, which will start this weekend, the ministry said.

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“It is not clear if the latest rise in the PMIs reflects a further improvement in January or simply the easing of sentiment effects that have been weighing on the surveys,” said Capital Economics in a report published on Monday.

“Either way, it adds to evidence that growth momentum in China is in the midst of a renewed recovery, albeit one that remains on shaky foundations and is unlikely to be sustained once current policy support is pared back.”

More measures were urged to boost the economy as Beijing is expected to set a growth target of around 5 per cent for this year, keeping with recent annual projections.

A number of regions have already outlined their growth plans for the new year, with advanced manufacturing coming up as a frequent topic.

Both Shanghai and Beijing dedicated space to the development of integrated circuits, artificial intelligence and biopharmaceuticals, as well as other new industries.

Guangdong, the wealthiest Chinese province, pledged to examine the potential of emerging industries such as new energy storage, ultra-high-definition video displays, biomanufacturing and commercial aerospace. The province also announced it would proactively lay the groundwork for future growth industries like 6G, quantum technology and humanoid robots.

Digital and low-altitude economies – the latter referencing industries related to civil aerial vehicles, manned and unmanned, operating within 1,000 metres above ground – were also areas for which provinces said they would formulate strategies.