China Economic Scan - Your daily update on the Chinese economy.
In this edition: China's fiscal revenues fell sharply in April, China looks to fine tune monetary and fiscal policy to stimulate growth, PBOC gov says high saving rate to build shanghai financial hub, FDI in China drops 22.5%, Chinese stocks close up on Friday.
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China's fiscal revenues fall sharply in April
- Combined central and local government revenues fell 13.6% from a year earlier, a far sharper decline than the 0.3% drop in March and the 1.2% drop in February.
- Government spending in April surged 24.5 percent from a year earlier as Beijing implemented its 4 trillion yuan ($585 billion) stimulus package to prop up domestic demand as the economy slows.
- Government outlays in the first four months totalled 2.05 trillion yuan, while spending was 1.79 trillion yuan. That left China with a fiscal surplus of 265 billion yuan through April, but the bulk of spending tends to come in the later months of the year, putting the country on track for an overall deficit.
China May ‘Fine-Tune’ Monetary, Fiscal Policies to Spur Growth
- China may “fine-tune” monetary and fiscal policies as it seeks to spark a revival in the world’s third-biggest economy, central bank Governor Zhou Xiaochuan said.
- “Economic conditions are still shaky, especially trade, so we don’t expect a marked change in policy,” said Ken Peng, an economist with Citigroup “Concerns over the quality of lending have definitely increased; some new controls could be imposed as early as the third quarter.”
- New lending grew more slowly in April after a record 1.89 trillion yuan ($277 billion) of loans in March.
PBOC Gov: China High Saving Rate To Help Build Shanghai As Hub
- "China is a country with a high saving ratio, offering abundant financing sources," Zhou said. "Although the central government encourages domestic consumption, China's saving ratio will remain high because the country is populous and has a cultural preference for saving."
- China's saving rate rose to 49.9% in 2007 from 37.5% in 1998, according to the latest figures from the PBOC. The U.S.'s savings rate in March was 4.2%, according to U.S. Commerce Department data.
- However, Chinese investors tend to have low risk tolerance compared with their counterparts in developed financial markets, which is an obstacle to financial innovation, he said.
Foreign Direct Investment in China Tumbles on Crisis
- Investment dropped 22.5 percent to $5.89 billion in April, the commerce ministry said at a briefing in Beijing today.
- That compares with a 9.5 percent decline in March. For the first four months of this year, spending fell 21 percent to $27.67 billion.
- Businesses that are partly or entirely foreign owned account for 30% of industrial output, 55% of trade and 11% of urban jobs, according to the commerce ministry.
Chinese shares down 0.9% on fall of surrounding markets
- Chinese stocks closed up on Friday, the TAIEX rose the most, up +1.96% to 6,489, the Hang Seng rose +1.51% to 16,791, the Shanghai Composite up +0.20% to 2,645, and the Shenzhen Component +0.21% at 10,273.
- Anhui Conch Cement, China’s biggest cement maker, gained +5.5% to 45.03 yuan, the biggest advance in two weeks. Its Hong Kong-traded stock was raised to “overweight” from “underweight” at JPMorgan Chase & Co., which said Chinese demand will grow by 10% this year.
- Huaneng Power lost -1.4% to 7.71 yuan. Huadian Power International, a unit of China’s fourth-largest electricity producer, declined -1.6% to 5 yuan.
Financial Indicators:
| Metric | Value | Point change | % change |
| Hang Seng Index | 16,791 | 249.01 | 1.51% |
| Shanghai Composite | 2,645 | 5.37 | 0.20% |
| Shenzhen Component | 10,273 | 21.08 | 0.21% |
| TAIEX | 6,489 | 124.92 | 1.96% |
| CNY/USD | 6.8275 | -0.002 | -0.03% |
Source: China Economic Scan
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