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MNI: Stimulus Seen Boosting China Manufacturing, Overcapacity

MNI (Singapore)
MNI (Beijing)

Chinese manufacturing investment is set to grow strongly this year, but overcapacity concerns are growing too.

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China’s manufacturing investment is set to maintain strong growth throughout the year thanks to policy stimulus, but weak demand means overcapacity will grow as well, depressing corporate profits and adding to the potential for trade friction, advisors and analysts told MNI.

Government pledges to support large-scale equipment upgrades and trade-in schemes to boost demand for cars and home appliances should ensure rapid growth in manufacturing investment, helping offset declines in real-estate investment, said Huang Hanquan, dean of the Academy of Macroeconomic Research, after factory investment quickened by 2.9 percentage points to grow 9.4% y/y in the first two months of 2024. Investment should rise by 5.3% throughout the year, according to analysts from Guotai Junnan Futures.

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China’s manufacturing investment is set to maintain strong growth throughout the year thanks to policy stimulus, but weak demand means overcapacity will grow as well, depressing corporate profits and adding to the potential for trade friction, advisors and analysts told MNI.

Government pledges to support large-scale equipment upgrades and trade-in schemes to boost demand for cars and home appliances should ensure rapid growth in manufacturing investment, helping offset declines in real-estate investment, said Huang Hanquan, dean of the Academy of Macroeconomic Research, after factory investment quickened by 2.9 percentage points to grow 9.4% y/y in the first two months of 2024. Investment should rise by 5.3% throughout the year, according to analysts from Guotai Junnan Futures.

Keep reading...Show less