MAPI: China Manufacturing Expansion Likely to Stabilize - Modern Distribution Management

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MAPI: China Manufacturing Expansion Likely to Stabilize

The outlook is for a period of consistency.

Overall economic growth in China was slower than expected for much of 2012, but the momentum accelerated noticeably in the fourth quarter, according to a report from the Manufacturers Alliance for Productivity and Innovation. The outlook is for a period of consistency, according to China Manufacturing Outlook 2013-2014.

The report notes that the fourth quarter advance was largely due to the stabilization in exports and the real estate sector, growth-supportive monetary policy and public support for infrastructure investment. For all of 2012, however, real (inflation-adjusted) GDP growth decelerated to 7.8 percent, the first time in more than a decade that growth failed to reach 8 percent.

The analysis, authored by economist Yingying Xu, Ph.D., explains the sales revenue forecast for China’s manufacturing in general, and provides detailed analysis and forecasts for 2013 and 2014 for a selected group of its most important industries.

“In 2013-2014, the pace of economic expansion is expected to remain at around an 8 percent annual rate as the global economic environment improves and net exports become less of a drag on growth,” Xu said. “Domestic consumption will benefit from the government’s agenda to boost household income through structural tax reform, a minimum wage increase, a strengthening of the social safety net and interest rate liberalization.”

Consistent with the overall economic trend, China’s manufacturing production regained some strength in the last quarter of 2012; Manufacturing sales revenue increased 7.1 percent in 2012, slightly lower than MAPI’s previous forecast of 8 percent.

Manufacturing sales revenue growth should see solid improvement in the next two years, with the materials and equipment industries as the lead drivers. MAPI forecasts that final 2013 and 2014 manufacturing sales revenue growth will be a robust 23 percent in both years.

“Consumer goods will continue to benefit from significant domestic demand, and for equipment industries, the expansion pace for heavy machinery and electrical machinery will be much faster than in 2012,” Xu said. “In addition, for those materials used intensively in infrastructure construction, real estate investment, and automobiles, sales revenue growth will speed up as downstream demand stabilizes and raw materials prices rebound.”

Basic metals – iron, steel, and nonferrous metals – are expected to show the most growth in 2013 and 2014, at 39 percent and 31 percent, respectively. Coke, refined petroleum products and nuclear fuel sales revenue is anticipated to grow by 29 percent in 2013 and 30 percent in 2014.

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