China: Good performance in service consumption during the Spring Festival period
2024-02-22
■ In January, economic indicators showed that the Chinese economy was stagnant, but overall, it showed a slow upward trend
■ Preliminary data released by the government indicates that service consumption during the Spring Festival period has significantly exceeded last year's levels
In China, many economic indicators, such as industrial production and retail sales, are usually summarized and released together in January and February, so our confirmation of the economic situation in January is limited. The Spring Festival (Lunar New Year) dates in January and February are different from year to year, resulting in different operating days for factories and retail stores. As a result, the monthly increase or decrease rate cannot fully reflect the actual economic situation. Due to the limited number of economic indicators released in February, it is usually difficult to capture the trend of the Chinese economy.
From the economic indicators in January, in terms of financial statistics, the money supply in the market (M2, a year-on-year increase of 8.7%) has slightly increased, but the balance of RMB loans (a year-on-year increase of 10.4%) has set the lowest growth rate since 1998. The trend of slowing down the speed of currency circulation and credit expansion is consistent with the slowdown in economic growth. January is a seasonal peak period for increased demand for funds before the Spring Festival, resulting in an increase in new RMB loans (492 billion yuan) compared to the same month last year (490 billion yuan), reaching a historic high. The significant increase in personal loans, such as housing loans, indicates that housing purchase restrictions have been eased to support the sluggish real estate market. Starting from February 5th, the reserve requirement ratio of commercial banks has decreased, and the benchmark interest rate for housing loans on February 20th, the 5-year optimal loan rate (LPR), has also been correspondingly lowered. These policies will be reflected in financial data after February. In other data, the Purchasing Managers Index (government-released values) shows corporate activity has slightly increased in both the manufacturing (49.2) and non-manufacturing (50.7) sectors. Although non-manufacturing activities have shown stable expansion, the manufacturing industry is still below 50, indicating that its activity is shrinking. In terms of price statistics, both the Consumer Price Index (down 0.8% year-on-year) and the Producer Price Index (down 2.5% year-on-year) show a downward trend. From the perspective of demand and supply, the growth of domestic demand is not significant. In summary, considering the above content, although the Chinese economy shows signs of stagnation, the slowdown trend is not obvious except for structural adjustments such as real estate transactions, and overall, it is still gradually improving.
In addition, the Chinese Ministry of Culture and Tourism stated that domestic tourism revenue during the Spring Festival period (February 10-17) increased significantly (a year-on-year increase of 47.3%). According to data from the State Administration of Taxation, based on value-added tax (equivalent to Japan's consumption tax) invoices, the average daily sales of service-related industries during the Spring Festival period (a year-on-year increase of 52.3%) have significantly increased. Similar to last year, the per capita expenditure seems to have decreased. Considering the frugal tendencies of families, it is necessary to be cautious. However, the service consumption performance during the Spring Festival period was good, indicating the vitality of the economy.
■ Preliminary data released by the government indicates that service consumption during the Spring Festival period has significantly exceeded last year's levels
In China, many economic indicators, such as industrial production and retail sales, are usually summarized and released together in January and February, so our confirmation of the economic situation in January is limited. The Spring Festival (Lunar New Year) dates in January and February are different from year to year, resulting in different operating days for factories and retail stores. As a result, the monthly increase or decrease rate cannot fully reflect the actual economic situation. Due to the limited number of economic indicators released in February, it is usually difficult to capture the trend of the Chinese economy.
From the economic indicators in January, in terms of financial statistics, the money supply in the market (M2, a year-on-year increase of 8.7%) has slightly increased, but the balance of RMB loans (a year-on-year increase of 10.4%) has set the lowest growth rate since 1998. The trend of slowing down the speed of currency circulation and credit expansion is consistent with the slowdown in economic growth. January is a seasonal peak period for increased demand for funds before the Spring Festival, resulting in an increase in new RMB loans (492 billion yuan) compared to the same month last year (490 billion yuan), reaching a historic high. The significant increase in personal loans, such as housing loans, indicates that housing purchase restrictions have been eased to support the sluggish real estate market. Starting from February 5th, the reserve requirement ratio of commercial banks has decreased, and the benchmark interest rate for housing loans on February 20th, the 5-year optimal loan rate (LPR), has also been correspondingly lowered. These policies will be reflected in financial data after February. In other data, the Purchasing Managers Index (government-released values) shows corporate activity has slightly increased in both the manufacturing (49.2) and non-manufacturing (50.7) sectors. Although non-manufacturing activities have shown stable expansion, the manufacturing industry is still below 50, indicating that its activity is shrinking. In terms of price statistics, both the Consumer Price Index (down 0.8% year-on-year) and the Producer Price Index (down 2.5% year-on-year) show a downward trend. From the perspective of demand and supply, the growth of domestic demand is not significant. In summary, considering the above content, although the Chinese economy shows signs of stagnation, the slowdown trend is not obvious except for structural adjustments such as real estate transactions, and overall, it is still gradually improving.
In addition, the Chinese Ministry of Culture and Tourism stated that domestic tourism revenue during the Spring Festival period (February 10-17) increased significantly (a year-on-year increase of 47.3%). According to data from the State Administration of Taxation, based on value-added tax (equivalent to Japan's consumption tax) invoices, the average daily sales of service-related industries during the Spring Festival period (a year-on-year increase of 52.3%) have significantly increased. Similar to last year, the per capita expenditure seems to have decreased. Considering the frugal tendencies of families, it is necessary to be cautious. However, the service consumption performance during the Spring Festival period was good, indicating the vitality of the economy.