Is China’s economy showing signs of stability?

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Profits earned by China’s industrial firms in August grew at the fastest pace in three years helped by rising sales, higher prices and lower costs, pointing to strengthening economic activity. But, as Sonia Legg reports, not everyone thinks it’s a sign stability has returned.

Is China’s economy showing signs of stability?

The world’s longest sea crossing isn’t open yet.

But a 23 kilometre section of the Hong Kong Macau Bridge is finished, according to state media, and will open soon.

The bridge is part of a $13 billion project, which includes undersea tunnels, viaducts and artificial islands.

China hopes it’ll help put the economy back in the fast lane.

Infrastructure projects have certainly given the industrial sector a boost, according to new state figures.

Profits are up by $80 billion – that’s almost a fifth higher than last year and the fastest increase in three years.


“I think there is evidence the economy is stabilising. It is a result of stimulus from the Chinese authorities – fiscal stimulus and monetary stimulus.”

The Asia Development Bank has raised its growth forecast for China from 6.5 to 6.6 percent.

But it’s that reliance on stimulus that’s worrying some.


“I think the key question in China is how they effect this transition from an export and investment-led economy to one which is driven by domestic consumption because what we are seeing is the stimulus is boosting the old parts of the economy and in effect it is slowing down this transition.”

It’s an uneven picture too.

Manufacturing profits rose 14 percent in August from a year earlier while mining profits fell almost 71 percent.

Traditional industries are being hobbled by excess capacity.

And China’s campaign to restructure coal and steel is proving painful.

Some estimate it could lead to 1.8 million workers being laid off.

Tags : Stability, Signs, Showing, Economy, Chinas

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