China: 2024 growth target likely reached – Standard Chartered

Average official manufacturing and non-manufacturing PMIs edged up above 50 in Q4. IP and services production index growth likely remained resilient in December on improved demand. We raise our Q4-2024 GDP growth forecast to 5.3% y/y from 4.8% and 2024 forecast to 5% from 4.8%, Standard Chartered’s economists note.

Growth momentum continued in December

“China’s official manufacturing PMI edged down 0.2pts to 50.1 in December, as production expansion moderated. Meanwhile, the new orders PMI edged up to an eight-month high, suggesting improved demand. The average manufacturing PMI returned to expansionary territory in Q4, the first time since Q1-2023. The non-manufacturing PMI edged up to a nine-month high of 52.2 in December on a rebound in both services and construction activity. The average non-manufacturing PMI edged up in Q4. Seasonally-adjusted GDP growth likely accelerated from Q3’s 0.9% q/q and expanded faster than Q1’s 1.5% q/q, on our estimate.”

“We expect industrial production (IP) and services production index growth to have remained robust in December on improved demand. New and used home sales jumped m/m, according to interim data, sending a positive signal on housing market stabilization. The decline in real-estate investment likely eased. Net exports likely remained the key growth contributor in Q4. The quarterly goods trade surplus likely reached a record-high USD 280bn in Q4 as exports continued to outperform imports. We expect annual average CPI inflation to have stayed at 0.2% in 2024 (versus our previous forecast of 0.3%).”

“We expect CNY loan growth to have slowed further to 7.5% y/y in December. The impact of the debt-to-bond swap programme on corporate loans outstanding likely more than offset an improvement in household loan growth. Meanwhile, total social financing (TSF) growth likely picked up on sustained strong government bond issuance.”