China released a series of figures yesterday showing continued strength in the world's second-largest economy as it prepares for new leaders tasked with sustaining the country's dramatic growth.
China shows strong signs of a return to full power
China released a series of figures yesterday showing continued strength in the world's second-largest economy as it prepares for new leaders tasked with sustaining dramatic growth.
"Overall it's a quite strong set of numbers, supporting our view of rebounding GDP growth," said Lu Ting, the China economist with Bank of America Merrill Lynch.
There was a double-digit increase in production at factories, workshops and mines for the first time since March, the national bureau of statistics said, a strong sign the country is shaking off the effects of the global economic slowdown.
The 10.1 per cent increase last month follows rises of 9.6 per cent the previous month, 9.2 per cent in September and a three-year low of 8.9 per cent in August.
Overall growth has slowed for seven straight quarters in China. It hit 7.4 per cent in the three months through to the end of September, the weakest performance in more than three years.
But the production statistics and other figures released by the bureau - including retail sales and inflation - all showed an improvement.
The statistics - the first major economic figures to be released since the Communist Party held its pivotal congress last month - will be welcomed by the political elite as it prepares to usher in new leaders in March.
Hu Jintao, the president, has called for efforts to strengthen domestic consumption in a bid to create a new growth model, echoing mounting calls for change to stabilise growth amid the slowdown.
Economists say the country faces mounting pressure to restructure its economy to ensure long-term growth, such as reducing its reliance on exports and boosting domestic consumption. Sun Junwei, an HSBC China economist, said yesterday's figures had created favourable conditions to implement reforms under Beijing's new leaders.
Xi Jinping replaced Mr Hu as the party chief last month and is strongly expected to succeed him as the national president in March. The party's new number two, Li Keqiang, is set to assume the premiership at the same time.
"The leaders will step up the reform efforts gradually in the coming quarters," Mr Sun said.
"There will not be drastic changes that will happen overnight but the current recovery will create favourable conditions to accelerate these reforms next year."
Other figures released yesterday included retail sales, the main measure of consumer spending, which rose 14.9 per cent year-on-year last month from 14.5 per cent in October.
Fixed-asset investment, a key gauge of infrastructure spending, was up 20.72 per cent year-on-year in the first 11 months of this year, from 20.7 per cent in January to October.
The consumer price index, the main measure of inflation, increased to an annual 2 per cent from a near three-year-low of 1.7 per cent in October, which will give policymakers less room to loosen monetary policy.
Wen Jiabao, the premier, and Chen Deming, the commerce minister, have both said in recent months they expected China to achieve its targeted growth rate of 7.5 per cent this year despite the impact of the global slowdown.
China cut interest rates twice this year and has reduced the amount of funds banks must keep in reserve three times since last December, to encourage lending.
But it has avoided the kind of huge stimulus package it announced after the 2008 to 2009 global financial crisis, which sent inflation soaring.
China's consumer prices rose 2 per cent last year from a year earlier while the producer-price index dropped 2.2 per cent, the bureau said yesterday.
The inflation rate compares with the 2.1 per cent median estimate of 35 analysts surveyed by Bloomberg News and a 1.7 per cent pace in October. Analysts forecast a 2 per cent decline in producer prices after a 2.8 per cent drop in the previous month. Inflation has eased from a three-year high of 6.5 per cent in July last year as food costs moderated. Consumer-price gains have held below the government's target for this year of 4 per cent for 10 months.
* with Bloomberg News and Reuters