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Saturday, 12 September 2009
Mainland economy stays on recovery course
The mainland economy continued to recover last month as the expansion in industry and retail sales accelerated while capital investment maintained its strong momentum, official data released yesterday shows.
The mainland economy continued to recover last month as the expansion in industry and retail sales accelerated while capital investment maintained its strong momentum, official data released yesterday shows.
Value-added industrial output, a key measure of activity in the manufacturing-dominated economy, grew at a 12-month high of 12.3 per cent from August last year, up from July’s 10.8 per cent annualised gain, the National Bureau of Statistics said.
It was the fourth consecutive month of growth, a sign the government’s stimulus efforts are gaining traction.
“China’s economic stimulus has clearly been effective,” said Jing Ulrich, the managing director and chairman of JP Morgan’s China equities and commodities.
Li Xiaochao, a spokesman for the statistics bureau, said the latest data showed an obvious recovery trend in the economy and laid a good foundation for achieving the government’s goal of 8 per cent economic growth this year.
“Still, China has a lot of work to do to reach its growth goal,” Li said, adding there were still some uncertainties facing the world’s third-largest economy.
Premier Wen Jiabao drove that point home on Thursday. “We could not, would not, change policy direction; we will continue to implement expansionary fiscal policy and appropriately loose monetary policy.”
Growth in fixed-asset investment stayed at a high level, rising 33 per cent from a year earlier in the January-August period, slightly higher than the 32.9 per cent gain in the January-July period.
Retail sales jumped 15.4 per cent last month, up slightly from July’s 15.2 per cent growth rate.
Retail sales in the first eight months grew 15.1 per cent from the same period last year, 0.1 percentage point higher than the first seven months.
Deflationary pressures are also easing as the economy rebounds. The consumer price index fell 1.2 per cent last month, narrowing from July’s 1.8 per cent decline. The producer price index dropped 7.9 per cent, the ninth consecutive monthly decline but smaller than July’s 8.2 per cent. Both indices rose compared with July, suggesting price rises are building momentum.
Bank of America Corp and Merrill Lynch economists Ting Lu and T.J. Bond said almost all indicators of real economic activities improved from the previous month.
“China’s economic recovery was solidified. With major economic indicators surprising on the upside, [yesterday’s] readings should be positive for markets from stocks to commodities,” they said in a research note.
Chinese and Asian shares and commodities edged up as the data supported regional recovery hopes.
But they also cautioned that some of the current high growth rates reflected a low base of comparison last year.
Ulrich warned that investment in some areas had driven up capacity to excessive levels. “Concerns about overcapacity will bring stronger curbs to discourage irrational investment,” she said.
The August data offered enough to confirm the recovery remained on track, said Ben Simpfendorfer of Royal Bank of Scotland. But it also introduced a few new uncertainties. For example, rising food prices could present a challenge for private consumption-led rebalancing.
He added: “[The] combination of worries about higher food prices, higher policy rates and slower credit growth will thus weigh on sentiment in the second half.”
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Mainland economy stays on recovery course
Cary Huang in Beijing
12 September 2009
The mainland economy continued to recover last month as the expansion in industry and retail sales accelerated while capital investment maintained its strong momentum, official data released yesterday shows.
Value-added industrial output, a key measure of activity in the manufacturing-dominated economy, grew at a 12-month high of 12.3 per cent from August last year, up from July’s 10.8 per cent annualised gain, the National Bureau of Statistics said.
It was the fourth consecutive month of growth, a sign the government’s stimulus efforts are gaining traction.
“China’s economic stimulus has clearly been effective,” said Jing Ulrich, the managing director and chairman of JP Morgan’s China equities and commodities.
Li Xiaochao, a spokesman for the statistics bureau, said the latest data showed an obvious recovery trend in the economy and laid a good foundation for achieving the government’s goal of 8 per cent economic growth this year.
“Still, China has a lot of work to do to reach its growth goal,” Li said, adding there were still some uncertainties facing the world’s third-largest economy.
Premier Wen Jiabao drove that point home on Thursday. “We could not, would not, change policy direction; we will continue to implement expansionary fiscal policy and appropriately loose monetary policy.”
Growth in fixed-asset investment stayed at a high level, rising 33 per cent from a year earlier in the January-August period, slightly higher than the 32.9 per cent gain in the January-July period.
Retail sales jumped 15.4 per cent last month, up slightly from July’s 15.2 per cent growth rate.
Retail sales in the first eight months grew 15.1 per cent from the same period last year, 0.1 percentage point higher than the first seven months.
Deflationary pressures are also easing as the economy rebounds. The consumer price index fell 1.2 per cent last month, narrowing from July’s 1.8 per cent decline. The producer price index dropped 7.9 per cent, the ninth consecutive monthly decline but smaller than July’s 8.2 per cent. Both indices rose compared with July, suggesting price rises are building momentum.
Bank of America Corp and Merrill Lynch economists Ting Lu and T.J. Bond said almost all indicators of real economic activities improved from the previous month.
“China’s economic recovery was solidified. With major economic indicators surprising on the upside, [yesterday’s] readings should be positive for markets from stocks to commodities,” they said in a research note.
Chinese and Asian shares and commodities edged up as the data supported regional recovery hopes.
But they also cautioned that some of the current high growth rates reflected a low base of comparison last year.
Ulrich warned that investment in some areas had driven up capacity to excessive levels. “Concerns about overcapacity will bring stronger curbs to discourage irrational investment,” she said.
The August data offered enough to confirm the recovery remained on track, said Ben Simpfendorfer of Royal Bank of Scotland. But it also introduced a few new uncertainties. For example, rising food prices could present a challenge for private consumption-led rebalancing.
He added: “[The] combination of worries about higher food prices, higher policy rates and slower credit growth will thus weigh on sentiment in the second half.”
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