China's Central Bank Cuts Rates Again to Boost Economy (AP, Feb 28) The People's Bank of China slashed its one-year benchmark lending and savings rates by 0.25 percentage points to 5.35 percent and 2.5 percent respectively. The cuts, which took effect Sunday, are the third of their kind in three months as signs of slack in China's economy become more pronounced. Despite the central government's apparent tolerance for the slowdown, a lengthening string of downbeat data may be prompting policymakers to take preemptive action against the threat of job loses and deflation.
RELATED: China PMI Shows Factory Activity Shrank Again in February (Reuters, Feb 28) China's official manufacturing purchasing managers' index reached 49.9 in February, as calculated by the National Bureau of Statistics. This marks the second straight month below the 50-point barrier which seperates expansion from contraction. In January, the official PMI read 49.8. A sub-index measuring output remained positive at 51.4 last month, down modestly from January's reading of 51.7. Meanwhile, production and business outlook jumped to a reading of 54, up from 47.4. Services were another bright spot, with a PMI for that sector edging up from 53.7 to 53.9.
RELATED: China February HSBC PMI at Seven-Month High (Reuters, Mar 2) HSBC/Markit's purchasing managers' index read 50.7 for February, up from 49.7 in January. A sub-index measuring new export orders plunged to 48.5, the steepest plunge in a year. Manufacturing employment also contracted for a 16th staight month, albeit at a slower rate of decline.
China Focus: Growth in Farmer-Turned-Laborers Slows (Xinhua, Mar 1) By the end of 2014, China had 274 million farmer-turned-laborers, 168 million of whom had moved to cities to work, according to figures from the country’s Ministry of Human Resources and Social Security. Yet the country’s population of non-agricultural workers expanded by just 1.9% last year, down from 2.4% growth in 2013. China’s population of migrant workers grew by 1.3% in 2014, down from 1.7% the prior year. Wages for migrant workers also rose by less than 10% to 2,864 yuan, slowing from the 13.9% jump posted in 2013.
RELATED: Minimum Wages to Jump 19% in Chinese Province (Nikkei, Feb 28) Authorities in Guangdong Province, one of China’s leading export-manufacturing hubs, will raise minimum wages by an average of 19% this year. Specifically, the minimum wage in the provincial capital of Guangzhou will rise by 22% to 1,895 yuan per month in May. From March, Shenzhen will have China’s highest monthly minimum wage after an increase to 2,030 yuan.
China's Home Prices Drop Again in Feb, but More Signs of Stability Seen (Reuters, Mar 2) New home prices fell by an average of 0.06% month-on-month and 1.62% year-on-year in 288 cities in February, marking the 11th straight month of decline, according to the results of a poll by Real Estate Information Corporation. This compares with monthly and annual declines of 0.1% and 1.62% respectively in January. Meanwhile, a separate survey by the China Real Estate Index System showed prices in 100 major cities falling 0.24% month-on-month and reversing from gains in January.
China Nurturing Start-Ups with Cash Incentives to Boost Economy (SCMP, Mar 2) China is operating at least 1,500 start-up incubators under the Torch Program, a 27-year old initiative that provides financing, policy supports and consulting services to high-tech companies, according to reports citing the Ministry of Science and Technology. What’s more, the ministry says its network of incubators grows by at least 15% every year and some 80,000 companies received support in 2014. In addition to the 3.45 billion yuan channeled into emerging enterprises through a separate innovation fund, the State Council announced earlier this year that it would devote another 40 billion yuan to funding strategic emerging industries.
China Overhauls Industry Gas Pricing (Xinhua, Feb 28) The National Development and Reform Commission, China’s top economic planner, has vowed to create a natural gas pricing regime where all industrial users are charged uniform rates. Under a pricing mechanism launched in mid-2013, existing consumers enjoyed cheaper natural gas than new-comers. Following an initial hike for older consumers in September, the NDRC raised wholesale prices for older buyers on Saturday by another 0.04 yuan per cubic meter. Meanwhile, the commission announced that new consumers would pay 0.44 yuan less per cubic meter starting in April, by which point both groups would be paying the same price. China consumed over 180 billion cubic meters of natural gas last year.
China's High-Tech Industry Surges in 2014(Xinhua, Feb 26) Added value in China's high technology industry increased 12.3% in 2014, according to data from the National Bureau of Statistics. Over the same period, overall industrial value-added output increased 7% to 22.8 trillion yuan.
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