China economy slow stabilization

China's October economic statistics show a general improvement in key indicators such as production, investment and consumption, manufacturing and retail showed signs of stabilization. The effect of the Chinese government to speed up the approval of high-speed rail and other infrastructure construction is gradually expanding. However, the domestic and foreign demand outlook remains uncertain economy will be strong, even if in the short term, but the strength of the recovery is likely to remain a lack of momentum.

Governor Zhou Xiaochuan of the People's Bank of China (PBOC), said the economy is slowly stabilized, individual indicators have started strong, that the worst of the economic slowdown during the past eighteen meeting on November 8.

In October, the above-scale industrial added value up 9.6%, compared to 0.4 percent in September. 2 consecutive months has appeared to improve, and hit the highest level in five months since. Enterprises trading price between the industrial producer price index (PPI) rose 0.2%, after a lapse of six months into positive growth.

Steel production increased by 11.7% compared to the same period last year, there has been substantial growth compared with September (4.9%), in addition to generating capacity increase of 6.4%, expanding 4.9 percent increase over September. The continued downturn in corporate activity has begun to shine.

Government in order to support economic growth, China is speeding up the approval of the investment project. Although these economic stimulus policies have not been accompanied by a new fiscal measures, but the 1 to 10 months fixed asset investment growth of 20.7% over the same period last year. An increase of 0.2 percent compared with 1 to September.

In particular, the construction of high-speed rail and other transportation networks is a major driving force of growth. Scale railway construction investment plan proposed by the Chinese Ministry of Railways to 516 billion yuan. Since the beginning of the year, nearly three times raised the investment plan, the increase amounted to 110 billion yuan. These infrastructure investments are already beginning to show results.

From the situation of China's domestic consumption, the new car sales in October increased by 5.3%, and has 2 consecutive months of growth. The total retail sales of consumer goods (retail sales) growth of 14.5%, an increase of more than 0.3 percent in September, the strong performance.

In this case, however, does that mean a sustained recovery, is still difficult to judge. Construction machinery manufacturers in China, a senior executive pointed out, "While the investment is worth the wait, but the actual demand is still a lack of strong growth momentum.

Steel due to the inventory of the basic completion of the prices have stopped falling, the manufacturers have quickly started to expand production. But it is undeniable that performance remains unresolved structural problems of overcapacity in the context of investment growth expectations are for early release. Approval of investment to actually start the construction, still facing financing constraints.

The total retail sales of social consumer goods in 2011 and had an increase of 17% is still at a low level. The widening income gap, still no significant improvement in overall consumption.

Not only the performance of the European economy is in the doldrums, and the Japan-China relationship continues to deteriorate. "Financial cliff" facing the United States (that is, at the same time facing massive tax cuts expire and government support slash) risk by widespread concern. China's internal and external factors of instability still exist, the People's Bank of China Governor Zhou Xiaochuan also think, "is still difficult to predict the impact of economic growth next year".