Jump to content
House Price Crash Forum
Sign in to follow this  
interestrateripoff

Analysts Sound Note Of Caution As China Celebrates Wave Of Economic Good News

Recommended Posts

http://business.timesonline.co.uk/tol/busi...icle6831583.ece

Worries over the strength of China’s economic recovery were soothed yesterday as a raft of surprisingly bullish official data showed soaring industrial activity, bank lending and investment.

Industrial production in August leapt by 12.3 per cent compared with a year before — substantially higher than the June and July figures and well ahead of expectations. Fixed asset investment growth soared 33.3 per cent and included an especially robust showing for property investment.

New bank loans, which have already unleashed an 8,100 billion yuan (£710 billion) tide of liquidity since January, were higher in August than in July, defying expectations of figures showing a weakening of the banks’ lending resolve.

Delight was tempered by terrible trade figures and still plummeting exports — a situation that led some observers to describe Friday’s figures as “unconvincingâ€. Jing Ulrich, head of China equities at JPMorgan, said that the figures had come at the end of the country’s investment-driven recovery and would give way to efforts by Beijing to shift to a more domestic-based model of growth. Overcapacity would keep inflation under control, she said.

The headline advances in industrial production and money supply were complemented by a sprinkling of other economic indicators — mostly supporting the idea that China’s recovery is now on a solid footing. Passenger car sales in August were 90 per cent higher than a year ago. The furniture and construction materials sectors saw growth of 41.6 per cent and 36.6 per cent respectively. Sales of cosmetics roared ahead by 22 per cent as consumers rediscovered their confidence. Property investment rose 14.7 per cent in the first eight months compared with the same period in 2008 and the consumer price index registered its first month-on-month rise since March.

However, the news came with warnings from some analysts on the distortion of the “base effectâ€. The one-year anniversary of the Lehman Brothers collapse, the credit crunch and the implosion of global trade means that year-on-year comparative data will, over the next few months, look exceptionally good and potentially misleading.

The glut of positive news came a day after Wen Jiabao, the Chinese Premier, signalled to investors that the Government would “unswervingly†keep open the stimulus taps of loose money and government spending — a combination that has restored economic growth rates to their former humming levels. His remarks eased fears of a “tightening†of policy in Beijing that drove Shanghai stocks down about 23 per cent in August.

Bank lending in August came in at 410 billion yuan — higher than the 355 billion yuan of new loans in July and reversing a decline that some feared would signal a drying-up of the stimulus effect.

So the Chinese are definitely aiming to create a huge internal boom with cheap money and govt spending. Thank god that's not what got us into this mess.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   291 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.