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The Chinese Economy Ends 2019 Strongly

The Chinese economy has ended the year on a more positive note, following a difficult 2019 in which trade wars played a big part in holding it back. Indeed, December has been the economy’s best period in 8 months. This has caused some analysts to predict a brighter 2020 for the Asian giant. 

 

The Latest Figures

 

The country’s manufacturing industry ended the year strongly, with output increasing in December. This suggests that the economy might finally be steadying after a long period of sluggishness and falling production numbers.

Increased domestic demand allied to improved global trading conditions and better weather were given as the main factors in the rising figures. There are still concerns over the global economy, which is one of the reasons for the current focus on international commercial debt collection.

The expected signing of the first part of a trade deal with the US is a big part of the reason for this boost. Figures from the National Bureau of Statistics show that the manufacturing purchasing managers’ index stayed at 50.2 in December.

However, the outlook appears to be getting more positive for companies that export goods. This is because the sub-index that covers new export orders has climbed above 50 at the end of the year. It is the first time that it has been over 50 since May of 2018.

The rise in copper prices to their highest in 8 months is another sign of increasing production levels. In terms of domestic demand, this has also strengthened as consumers continue to spend healthily. 

The Less Positive Figures

Not everything in the Chinese economy was as positive as the details noted earlier. For example, the non-manufacturing numbers fell to 53.5, which is 0.9 down from the previous figure of 54.4.  

Another area with on-going issues is the so-called new economy. This includes industries such as semiconductors, advanced manufacturing and artificial intelligence. While this is one of China’s main growth motors, it has been struggling in recent months. 

This is a worry, as it is hoped that the new companies in this area will eventually replace the traditional heavy industries in China. The idea is that this leads to a more efficient and forward-looking economy for the country in the future.

Yet, the percentage of companies working in the new economy has dropped since 2014. They have also been suffering a worsening financial situation since 2017. Revenues and investment levels have fallen for this type of business.

 

What Happens Next?

 

It is believed that the Chinese economy may finally be near the bottom of its current cycle. Output may carry on slowing in the long-term, but government initiatives to support industry here seem to be working and are giving genuine cause for optimism.

This means that economists are now more upbeat about the prospects for 2020. They predict that the economy will slow down next year, but that the long-term sustainability will improve. The National Bureau of Statistics points out that there is still a degree of “volatility and uncertainty”, though.