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Expert View on China's Economy

Officials at Japan's Finance Ministry on Tuesday will release data on corporate capital expenditures for the July-to-September period.

China will release figures on manufacturing activity for November on the same day. Official data last showed the manufacturing PMI at 49.8. A figure below 50 indicates decline in factory activity.

Officials at the European Central Bank will hold a policy meeting on Thursday. Many investors are waiting to see if the bank expands its easing measures.

The US jobs report for November will be released on Friday. The unemployment rate fell to a 7-and-a-half year low last month.

Ke Long, a senior fellow at Fujitsu Research Institute, shares his insights on China’s manufacturing data.

"China's manufacturing industry basically is still in a very negative position. Actually, investors in private companies are concerned about the economic risks from the international market because the situation of exports is very difficult. Meanwhile, we find that the government just postponed all of the reforms, especially the goal to privatize the SOEs, state-owned enterprises.

But the government seems very reluctant to reform the SOEs. So to encourage investment and to stimulate consumption, I think the government should show us the roadmap to reform the state owned enterprises.

Ke said China will hit its growth target of around 7 percent this year. But he warns that the economy will slow further if the government postpones reforms.

"At the end of this year, I think one thing that the government can choose to do is to start some big infrastructure project like building an express railway, a highway, or airport terminal project. It’s necessary. But I do not think they can sustain economic development. I think next year, Chinese economic growth rate could go down to 6 or 5 percent. And there is a very interesting argument as to whether economic data is believable or not.

I think the official Chinese economic data is unbelievable, and that actual real GDP growth rate is only at 5 percent. The point is with the 5 percent GDP growth rate that will mean the society is going to be in turmoil. So how do you stabilize the society? I think the government needs to make more effort to reform the economic system and to strengthen the social security system."

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