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China’s Economic Recovery Continues To Gain Momentum

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John Okeke

China’s manufacturing Purchasing Managers’ Index (PMI) for June stood at 50.9 percent, up 0.3 percentage points from May, according to data jointly released on June 30 by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP).

 

The figure has been kept above 50 percent for four consecutive months, indicating that the country’s economic recovery continued to gain momentum with constantly enhanced stability of industrial chains.

 

Among the 13 sub-indices, those for production, new orders, new export orders, existing orders, purchase quantity, import, purchase price, producer price, and raw materials inventory rose 0.3 to 7.3 percentage points from the previous month in June, while the sub-index for supplier delivery time remained unchanged over the previous month.

 

Besides, sub-indices for finished goods inventory, employee, and production and business activities expectation dropped 0.3 to 0.5 percentage points from May.

 

The slight rise in the PMI in June above the 50-point mark which indicates economic expansion showed that China has accelerated its economic recovery, according to Zhang Liqun, a researcher with the Development Research Center of the State Council.

 

A series of policies have been implemented after the annual sessions of China’s top legislature and political advisory body in May to keep employment, the financial sector, foreign trade, foreign and domestic investments, and expectations stable and ensure security in job, basic living needs, operations of market entities, food and energy security, stable industrial and supply chains, and the normal functioning of primary-level governments, Zhang noted.

 

Together with the previous policies rolled out to promote work and production resumption, these macro policies delivered more visible results, Zhang added.

 

Fiscal and monetary policies’ role in expanding domestic demand should be strengthened to further sustain the positive momentum of economic recovery.

 

China saw a recovery of market demand in general and growing driving forces for economic development. The country’s economy continued to recover with stable growth in consumer last month.

 

Sub-index for new orders stood at 51.4 percent, up 0.5 percentage points from May, while that for new export orders grew 7.3 percentage points from the previous month to 42.6 percent, with the decline in export significantly narrowing.

 

The recovery of market demand will further drive economic growth and business operation.

 

Production activities of enterprise rebounded, leading to an increase in raw material purchases. In June, sub-index for production was 53.9 percent, up 0.7 percentage points from the previous month and maintained above 53 percent for four months in a row.

 

More production activities drove enterprises’ demand for upstream products in the industrial chain. As a result, the purchase of raw materials increased accordingly, and the sub-index for purchase quantity rose 1 percentage point from May to 51.8 percent.

 

Meanwhile, prices in the whole sector picked up in a more coordinated way. Last month, driven by the rapid growth of enterprises’ purchase quantity, prices of basic upstream raw materials continued to rise on the basis of the previous month. The sub-index for purchase price grew 5.2 percentage points from May to 56.8 percent, while that for producer price rose 3.7 percentage points from the previous month to 52.4 percent, exceeding the 50-point mark for the first time this year.

 

The PMI indicated that the Chinese economy recovered gradually from March after some fluctuations early this year due to the COVID-19 epidemic, said Wen Tao, an analyst with the China Logistics Information Center.

 

In Q2, both the production and market demand saw a rapid recovery. The average sub-indices for production and new orders were 53.6 percent and 50.8 percent, respectively, which were above the 50-point mark and higher than that of Q1 and the same period last year.

 

Besides, purchasing activities and employment recovered significantly in Q2, with index readings higher than that of Q1 and the same period last year.

 

By the end of the first half of this year, China’s economic recovery continued to gain momentum with continuously enhanced stability of industrial chains, laying the foundation for a stable start in the second half of the year.

 

The non-manufacturing PMI, also released by the NBS and CFLP on June 30, edged up 0.8 percentage points from May to 55.4 percent in June. Except for non-manufacturing PMI sub-indices for supplier delivery time and for production and business activities expectation, which were down 0.8 percentage points and 3.6 percentage points, respectively, other sub-indices all grew 0.1 to 2.0 percentage points from May.

 

Cai Jin, CFLP vice president, said China’s non-manufacturing PMI has been picking up on a month-on-month basis since Q2, indicating a good recovery momentum of the non-manufacturing sector.

 

Changes in the sub-indices for non-manufacturing PMI showed that China saw a sound momentum for steady economic recovery as most industries recovered growth. In the second half of this year, the country needs to promote economic transformation, expand domestic demand and strengthen the endogenous dynamism of economic recovery to ensure continuous and sound economic growth.

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FAAC MEETING: FG, STATES AND LGCs SHARE N1,152.756 TRILLION FROM A GROSS TOTAL OF N2,326.149 TRILLION FOR THE MONTH OF FEBRUARY, 2024

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The Federation Account Allocation Committee (FAAC), at its February 2024 meeting chaired by the Honourable Minister of Finance and  Co-ordinating Minister of the Economy, Wale Edun, shared a total sum of N1,152.756 trillion to the three tiers of government as Federation Allocation for the month of February, 2024 from a gross total of N2,326.149 trillion.


In a statement Signed by Director, Press and Public Relations of FAAC Mohammed Manga  in Abuja revealed that from the stated amount inclusive of Gross Statutory Revenue, Value Added Tax (VAT), Electronic Money Transfer Levy (EMTL), and Exchange Difference (ED), the Federal Government received N352.409 Billion, the States received N366.950 Billion, the Local Government Councils got N267.153 Billion, while the Oil Producing States received N166.244 Billion as Derivation, (13% of Mineral Revenue).


The sum of N66.456 Billion was given for the cost of collection, N856.937 Billion allocated for Transfers Intervention and Refunds, while the sum of N250.000 Million was saved.


The Communique issued by the Federation Account Allocation Committee (FAAC) at the end of the meeting indicated that the Gross Revenue available from the Value Added Tax (VAT) for February 2024, was N460.487 Billion, which was an increase from the N420.733 Billion distributed in the preceding month, resulting in an increase of N39.755 Billion.


From that amount, the sum of N18.420 Billion was allocated for the cost of collection and the sum of N13.262 Billion given for Transfers, Intervention and Refunds. The remaining sum of N428.806 Billion was distributed  to the three tiers of government, of which the Federal Government got N64.321 Billion, the States received N214.403 Billion, Local Government Councils got N150.082 Billion.


Accordingly, the Gross Statutory Revenue of N1,192.428 Billion  received in the month  was higher than the sum of N1,151.808 Billion received in the previous month of January 2024, N40.620 Billion. From that amount, the sum of N47.404 Billion was allocated for the cost of collection, a total sum of N843.675 billion for Transfers, Intervention and Refunds and a total of N200.000 Billion saved.


 The remaining  balance of  N101.349 Billion was distributed as follows to the three tiers of government: Federal Government got the sum of N7.351Billion, States received N3.729 Billion, while the sum of N87.394 Billion was allocated to LGCs as Derivation (13% Mineral Revenue).


Also, the sum of N15.789 Billion from  Electronic Money Transfer Levy (EMTL) was distributed to the three (3) tiers of government as follows: the Federal Government received N2.274 Billion, States got N7.578 Billion, Local Government Councils received N5.305 Billion, while N0.632 Billion was allocated for Cost of Collection.


The Communique also disclosed N657.444 Billion from Exchange Difference, which was shared as follows: Federal Government received N278.463 Billion, States got N141.240 Billion, while the sum of N108.891Billion was allocated to Local Government Councils, N78.850 Billion was given  for Derivation (13% of Mineral Revenue) and the sum total of N50.000 Billion was saved.


Petroleum Profit Tax (PPT), Value Added Tax (VAT), Import Duty, Excise Duty and Customs External Tarrif levies (CET) increased significantly, while Oil and Gas Royalties increased marginally.Electronic Money Transfer Levy (EMTL) and Companies Income Tax (CIT) recorded considerable decreases.


According to the Communique, the total revenue distributable for the current month of February 2024, was drawn from Statutory Revenue of N101.349 Billion, Value Added Tax (VAT) of N428.806 Billion,  N15.157 Billion from Electronic Money Transfer Levy (EMTL), and  N607.444 Billion from Exchange Difference,  bringing the total distributable amount for the month to N1,152.756 trillion.


The balance in the Excess Crude Account (ECA) as at March 2024 stands at $473,754.57.


In his opening remarks at the meeting, Wale Edun, the Honourable Minister of Finance and Co-ordinating Minister of the Economy, said in the fiscal side, there is a move to raise the forex trading.


He informed that President Bola Ahmed Tinubu led administration in its avowed determination to achieve and ensure rapid and sustained economic growth in the country has commenced the intervention programme which is a direct payment to about 15 -17 million poorest and vulnerable Nigerians, after carefully making sure that the system is fraud free, using the Biometric Registration and Digital Registering. 


He explained  that there is an increase in revenue, and *we are commending the revenue generating agencies for their hard work

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