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Analysts: Domestic markets pushing China’s economy

Updated: Nov 13,2015 4:01 PM Times

Despite downward pressures, China’s economy is still running well as several data sources indicate that the nation’s domestic consumption is growing.

Domestic markets, such as automobile and real estate markets, serve as the key engine to drive the economy.

Data released by the China Association of Automobile Manufacturers shows that 2.2 million automobiles were sold in October, an 11.8 percent year-on-year growth, the highest rise since last December.

According to Reuters, the rebound in China’s automobile market is the result of tax reductions on low-emission vehicles.

The real estate market also saw growth, as data released by the National Bureau of Statistics (NBS) shows that revenue reached 5.47 trillion yuan ($858.2 billion) in the first 10 months of this year, an 18 percent year-on-year growth.

Total retail sales of consumer goods in October reached its highest rate this year, with an 11 percent growth, higher than the expected 10.9 percent.

In addition, according to data from the Ministry of Commerce, foreign direct investment (FDI) witnessed a steady growth in October, reaching $8.77 billion, a 4.2 percent year-on-year growth. From January to October, FDI reached $103.68 billion, an 8.6 percent rise.

These promising data sent a positive message to stock markets as both the Shanghai and Shenzhen stock markets closed up on Nov 11.

But growth rate in traditional industries endured a slight slowdown in October, as data released by the NBS shows a 5.6 percent growth in added value of industries above designated size compared with the same period last year, lower than expectations.

Jiang Yuan, a senior statistician at NBS, said that the tiny fall in the growth rate of industrial production indicates that the development of new industries is not enough to cope with the downward pressure, while traditional industries are restructuring.

Given these economic data, new monetary policies will be necessary to maintain a steady economic growth in the fourth quarter.

Wan Zhe, chief economist at China National Gold Group Corp, noted that year-on-year growth in many economic data indicates that even with a relatively high downward pressure, China’s economy remains dynamic and robust.

But these data do not necessarily mean that the downward pressure in the process of economic transformation and upgrade is over, she added.