China’s economy to begin recovering in 3rd quarter
According to an industry association, after continuing to fall in the first half of this year, the economy will pick up in the third quarter.
The first two quarters will be the most difficult time for the industry. And from the end of the second quarter, the power demand, a barometer of the country’s economy may start increasing, in north, east China and southern coastal regions, compared with last year. After that, the demand in the central and western regions will also be driven up in the fourth quarter, said China Electricity Council (CEC).
Senior CEC executive Xue Jing said that the main reason behind the declining demand for power is the sharp decline in power consumption from high electricity consuming industries.
In the fourth quarter of last year, power consumption from the chemicals, building materials and metals sectors all experienced negative growth, he added.
The high growth of power demand in the first half of 2008 makes the growth rate in 2009 difficult to be outstanding, Xue said. The CEC forecast the China’s power consumption will increase 5% in 2009, which can supply the need for 8% growth in GDP, said Wang Yonggan, CEC’s secretary general.
A slowdown in industrial activities nationwide was indicated by China’s power generation falling for three consecutive months since last October compared with the corresponding period in the previous year.
China’s power generation has been a barometer of the economy in the past years because of so much of the country’s growth relying on power-intensive industries such as steel, aluminum and chemicals.
“The manufacturing industry has seen some recovery, that will ensure the power demand to increase in the second quarter,” said Dong Xian’an, macroeconomic analyst of China Southwest Securities.
Based on the figures of the China Federation of Logistics and Purchasing, the Purchasing Managers’ Index (PMI) of China’s manufacturing sector rose to 45.3% in January, from 41.2% in December and a record low of 38.8 percent in November.
The improved data makes the economic situation brighter. It is believed that economic decline may be bottoming out soon.
Some experts hold the opinion that China’s GDP growth will experience a surprising jump in 2009, with the bottom having appeared in the fourth quarter last year.
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