The China Economic Quarterly is a market outlook prepared by PwC China and Hong Kong on a quarterly basis to share the latest economic and policy updates. This issue provides an overview of the macroeconomic trends in Q1 2019, some policy updates and hot topic analysis.
Here are some highlights of the macro economic and policy updates:
China’s central bank substantially increased monetary support for the real economy
According to data from the People’s Bank of China, in the first quarter, aggregate financing to the real economy (AFRE) was 8.18 trillion yuan, and substantially went up 2.34 trillion yuan year-on-year. AFRE is the total volume of financing to the real economy, which includes flows of RMB loans, foreign currency-denominated loans, undiscounted bankers’ acceptances, net financing of corporate bonds, domestic equity financing by non-financial enterprises, net financing of local government special bonds etc. Compared to the 5.85 trillion yuan of AFRE in the first quarter of 2018, the growth rate is about 40%.
China increased fiscal spending by 15% in the first quarter, much higher than the past year
In addition to stronger monetary measures to uphold economic growth, China’s Ministry of Finance also accelerated fiscal support by increasing spending to 5.86 trillion yuan, which includes 0.69 trillion and 5.17 trillion yuan for central and local general public budget expenditure respectively. The growth rate of fiscal spending was around 15%, or four percentage points higher than the same period in 2018.
Will the world's largest manufacturer face a turning point?
In 2018, manufacturing of automobiles in China had negative growth of 4.2% for the first time since 1990. This is an issue because China has the largest automobile market (in terms of sales and production), the second largest economy, and is the world’s largest manufacturer. During the first quarter of this year, manufacturing of automobiles declined 10.4% again, meanwhile, the growth of industrial added values for companies over certain scales went up 6.5%, but during the first two months, profits of industrial added values for companies over certain scales dropped 14.0% and revenues only increased by 3.3%.
Mainland China and Hong Kong Managing Partner - Markets, PwC China
Tel: + (10) 6533 2838 / + 2289 8288
China Central Markets Leader and Entrepreneurial and Private Business Co-Leader, PwC China
Tel: + (21) 2323 3029
G. Bin Zhao
Senior Economist, PwC China
Tel: + (21) 2323 3681