China, the growth adopted by Congress

Marco Luraghi Countries Leave a Comment

The annual meeting of the National People’s Congress of the People’s Republic of China, NPC (simplified Chinese: 中国共产党全国代表大会) officially started on March 5 in Beijing, and ended on March 13, 2014.

The members of the congress meet to discuss, define, and publish the economic and social reforms and objectives for the newly-begun year. This assembly represents the second round of talks after the first one held in March 2013.

During the first of the eight days of the meeting, the Chinese Prime Minister, Li Keqiang first divulged a report on the past year (2013), and then opened the conference on the plans for the new year.

In 2013, Chinese GDP YoY rate of growth experienced a small contraction of around 0.1 percentage points relative to 2012, achieving a growth level of 7.7%. Nonetheless, this rate of growth was still higher than the governmental target set at 7.5 percent. However, 2013 showed the lowest growth rate ever registered since 1999.

Cina GDP

According to estimates issued by WTO in collaboration with the China National Bureau of Statistics, the YoY growth rate of exports (merchandise trade) is expected to have slowed down, achieving a level equal to 7.3 percent, the lowest since 2010.

In 2013, retail sales registered a 13.1% YoY rate of growth, a reasonable figure even if less than the three previous years.

The PMI (Purchasing Managers Index) is an indicator resulting from the weighted average of other minor indicators, and is elaborated by the China National Bureau of Statistics. The methodology to obtain these data consists of questionnaires filled in by hundreds of companies active in manufacturing as well as services. A value of the index over 50% denotes a positive sentiment of the respondents.

Manufacturing PMI – 2013 data revealed a satisfactory performance because the index was over the 50 percent threshold. The lowest levels were registered in February (spring festival) and June (credit crunch). On the other hand, during Q4 2013, the index was stable in October and November (51.4%), and decreased to 51 percentage points in December 2013.

Non-Manufacturing PMI –A trend similar to the Manufacturing PMI can be noted, with the minimum points in February and June. In the last quarter of 2013, the Index was following a downward trend, given the decreasing confidence in the service sector, and going from 56.3% in October to 54.6% in December.

Cina PMI

These data show that China’s growth has slowed in recent years. However, they also demonstrate that the weight of the importance of Chinese political choices has an ever-increasing impact on the global economy.

Policy makers in Beijing are aware of their influence abroad; at the same time they also have to confront a population at home which is becoming more and more demanding on matters such as pollution and education.

The first reports about work by Prime Minister Li explain that the year 2014 will have the following economic goals:

–       A GDP growth to be maintained at 7.5% YoY

–       An increase in the CPI to hold a maximum of 3.5% YoY;

–       Maintain an unemployment rate of 4.6%.

China seems to be undertaking a strategy geared towards stabilizing the expectations of the markets in order to work on achieving quality growth that is capable of providing the foundations for a more sustainable and innovative future.

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About the Author

Marco Luraghi

Post-Graduate in International Business Management at Carlo Cattaneo University – LIUC of Castellanza, currently living and working in Shanghai as Financial Analyst, with focus on corporate finance, planning and controlling; at the same time he is taking the opportunity to get to know in depth the Chinese culture and language. From working in Montreal (Canada), Italy and Shanghai to attending Master’s courses in economics and business strategy at W.P. Carey School of Business of Arizona State University, Marco has been continuously joining international experiences in Europe as well as in the United States. He is motivated and determined to pursue his international career with passion while continuously seeking for growth and personal evolvement. He has an older brother with whom he shares, amongst other things, a strong interest for team-sports, he likes going out with friends, and reading about New Management Theories and Self-Leadership.

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