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POLITICAL ECONOMY
China manufacturing growth pick up in June: govt
by Staff Writers
Beijing (AFP) July 01, 2014


Kerry to lead US team for economic talks in China
Washington (AFP) June 30, 2014 - Top US officials visit China next week for key annual talks, as ties strain between the two economic powers amid concerns over cyber-spying and regional maritime tensions.

US Secretary of State John Kerry and Treasury Secretary Jack Lew will lead the US delegation to the sixth meeting of the US-China Strategic and Economic Dialogue, the State Department said Monday.

The talks, on July 9 and 10, will address "the challenges and opportunities that both countries face on a wide range of bilateral, regional and global areas," spokeswoman Jen Psaki said in a statement.

The two men will be joined by their Chinese co-chairs State Councilor Yang Jiechi and Vice Premier Wang Yang.

But the talks come against the backdrop of a slew of contentious issues between Washington and Beijing, including intellectual property rights and China's valuation of its currency, the yuan.

The world's top two economies have also long been at loggerheads over hacking.

Last month, Washington indicted five Chinese military officers for allegedly hacking into US computers to steal trade secrets.

China responded swiftly and angrily, summoning the US ambassador and charging hypocrisy as former CIA contractor Edward Snowden has revealed widespread US snooping inside China.

Beijing also cancelled a meeting of a cybersecurity working group, set up just a year ago, which was supposed to meet as part of next week's talks.

In recent months, China has also moved assertively and unilaterally in maritime disputes with Japan, Vietnam and the Philippines despite US pleas to respect international standards.

US officials have voiced alarm at China's assertions of legal authority over foreign vessels in the 200-mile exclusive economic zone from its coast.

China claims most of the South China Sea -- including waters approaching its neighbors' coastlines -- and has been increasingly assertive in staking the claims.

Washington says it does not take a position in the disputes, but its insistence that Beijing should follow "rules of the road" and discuss the matter in regional fora with American allies, has antagonized China.

"Senior civilian and military officials will exchange views on a range of security issues of strategic importance to both countries," Psaki added.

Chinese manufacturing activity expanded at its fastest pace this year in June, an official survey showed Tuesday, in a sign that Beijing's attempts to tackle slowing growth in the world's number two economy are gaining traction.

The official purchasing managers index (PMI) hit 51.0 last month, the National Bureau of Statistics said in a statement. The figure is up from 50.8 in May and the best since a similar reading of 51.0 in December.

The index tracks manufacturing activity in China's factories and workshops and is a closely watched indicator of the health of the economy. A reading above 50 indicates growth, while anything below points to contraction.

The result, however, was marginally below the median 51.1 forecast in a survey of eight economists by Dow Jones.

Separately, a private survey published by British bank HSBC put China's PMI at 50.7 in June -- slightly below the preliminary reading of 50.8 released last month but well above May's 49.4. The expansion was the survey's first since December.

Authorities have since April rolled out a series of measures to bolster growth, including tax breaks for small enterprises, targeted infrastructure outlays and incentives to encourage lending in rural areas and to small companies, steps dubbed as "mini-stimulus" by economists.

"The continued recovery in manufacturing comes despite subdued property sales data for June," Julian Evans-Pritchard, China economist for Capital Economics, said in a report.

"It therefore appears that the downwards pressure on the economy from the property sector is still being offset by the recent state-led rebound in infrastructure investment as well as healthy external demand."

House prices in major Chinese cities fell for a second consecutive month in June, an independent survey showed Monday, providing more evidence of a deflating property bubble.

The average price of a new home in 100 major cities was 10,923 yuan ($1,775) per square metre last month, down 0.50 percent from May, the China Index Academy (CIA) said in a regular monthly survey.

"The economy continues to show more signs of recovery, and this momentum will likely continue over the next few months, supported by stronger infrastructure investments," Qu Hongbin, HSBC's chief China economist, said in comments accompanying HSBC's announcement.

But he cautioned that "downside risks" in the property market will remain a negative factor.

The PMI data comes after China said earlier this year that economic growth for the first quarter of 2014 hit its weakest pace in 18 months.

Gross domestic product grew 7.4 percent year on year in January-March, weaker than the 7.7 percent in October-December.

The result was the worst since a similar 7.4 percent expansion in the third quarter of 2012.

China in March set its annual growth target for this year at about 7.5 percent, the same goal as 2013.

Officials including Premier Li Keqiang earlier this year stressed that the target was flexible -- seen as a hint it may not be achieved.

Last month, however, Li called achieving it the "inescapable responsibility" of local governments and urged "no delay" in action, an indication of official concern.

"We expect Beijing to continue rolling out a slew of small-scale measures to deliver the around-7.5 percent annual growth target," Bank of America Merrill Lynch economists Lu Ting and Zhi Xiaojia said in a research note.

China's leadership says it wants to make private demand the key driver for the country's economic growth, moving away from over-reliance on huge and often wasteful investment projects that have girded decades of expansion.

Such a makeover is expected to result in growth that is slower but seen as more sustainable in the long run.

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POLITICAL ECONOMY
China housing prices fall for second month: survey
Shanghai (AFP) June 30, 2014
Housing prices in major Chinese cities fell for a second consecutive month in June, an independent survey showed Monday, providing more evidence of a deflating property bubble. The average price of a new home in 100 major cities was 10,923 yuan ($1,775) per square metre this month, down 0.50 percent from May, the China Index Academy (CIA) said in a regular monthly survey. Prices had dro ... read more


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