UNCERTAINTY OVER US TRADE DEAL
Policymakers rolled out a series of consumer loan subsidies in mid-August, a decision vindicated by separate factory output and retail sales data for the month, which saw their weakest growth in 12 months.
Pan Gongsheng, the governor of the People’s Bank of China, said last week a range of monetary policy tools to support the economy remained available, but refrained from following the US Federal Reserve with a rate cut, as some economists speculated the central bank might.
Despite signs the US$19 trillion economy is losing momentum, authorities appear in no hurry to roll out major stimulus measures, given resilient exports and a stock market rally, market watchers say.
Adding to signs of a slowdown, the official non-manufacturing PMI, which includes services and construction, fell to 50.0 from 50.3 in August, according to the National Bureau of Statistics (NBS), its worst reading since November.
The NBS composite PMI of manufacturing and non-manufacturing came in at 50.6 in September, compared with 50.5 in August.
The new export orders sub-index contracted for the seventeenth straight month, while employment and factory gate prices also remained firmly in the doldrums.
The data point to producers slashing prices to find buyers overseas, despite the fact that China’s exports to regional rival India hit an all-time high in August, according to customs data, and shipments to Africa and Southeast Asia are on track for annual records.
But no other country comes close to the consumption power of the US, where Chinese producers sell more than US$400 billion worth of goods annually, accounting for around 14 per cent of total exports.
Chinese leader Xi Jinping phoned Trump on Sep 19 for the first time in three months, and while the call appeared to ease tensions, it remains unclear whether it yielded the expected agreement on popular short-video app TikTok, which analysts see as key to a broader trade deal.
Disagreements on technical details appeared to be weighing on negotiations, as Chinese and US trade officials met again last Thursday to revisit issues discussed in talks before this month’s Madrid summit, where a framework TikTok deal was reached.
