China’s economic recovery is expected to gain momentum in the last quarter of this year as it eases cost pressures faced by SMEs and strengthens and calms financial support to boost credit growth, experts said on Friday.
China’s window for easing monetary policy may not close until the Federal Reserve Board raises interest rates. A more comfortable financial situation helps to reduce the financial burden on small private companies, reduce their increasing pressure on costs and stabilize their jobs.
According to the National Bureau of Statistics, Chinese manufacturers experienced a significant increase in purchase costs last month. In addition, more than 40% of small-scale producers surveyed by NBS say they have problems such as tight cash flow and high raw material costs.
Manufacturing showed its first contraction since February 2020 last month, as production and demand levels lag behind, according to NBS.
The central bank, the People’s Bank of China, is expected to implement structural policy measures to promote green lending. Such a decline in RRR, which is the share of money that banks have to reserve, leads to lower market interest rates.
Experts said other factors also supported the economic expansion in the fourth quarter. This includes accelerating fiscal spending, investing in infrastructure, and recovering consumer spending as local COVID-19 cases are curtailed.