New Year effect behind China’s poor growth in Jan-Feb: Iris Pang, ING Wholesale Banking

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If you remove the Chinese New Year factor, industrial production grew 6.1% year-on-year and it is not that bad, said Iris Pang, Greater China Economist, ING Wholesale Banking, in an interview with ET Now.

Edited excerpts:

We have frequently been seeing signs of a slowdown in China. Industrial growth is at a 17-year low. Does this make a good case for further stimulus and how soon can we expect it?


First of all, this figure of 5.3% year-on-year, which you have said is a 17-year-low, is actually quite tricky because it falls in the month of Chinese New Year. When you calculate year on year, last year the Chinese New Year fell in January and so when you calculate, the base effect will be twisted. So taken away the Chinese New Year factor, industrial production in fact, grew 6.1% year on year and it is not that bad.

So it was a seasonal impact that happened because of the transfer of Chinese New Year?


The Chinese New Year has a very important impact on all the activities that we see today — not only industrial production but also retail sales and fixed asset investment.

For retail sales, we actually see that some of the items are heavily affected by the Chinese New Year. For example, catering growing at more than 9% while the others are not growing that strongly is again because during Chinese New Year, many Chinese citizens travelled and did not spend at home. But this may change in 2019.

In terms of next month’s number, do you expect normal activity to continue? Will that be a comparable growth number?


In March, we will have a better set of numbers which will be more reflective of the underlying economy and growth rate especially for industrial production. Factories close for over three weeks during the Chinese New Year and so the whole of February should have no activities. I expect March will be better and the whole Q1 compared to last year Q1 will cancel out the Chinese New Year effect.

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