Saturday, 11 September 2010

China's trade surplus shrinks but economy maintains momentum

A report on Friday showed that China's trade surplus shrank in August as exports slowed. AFP/CNA reports:

China's trade surplus unexpectedly shrank to 20.03 billion dollars in August as imports accelerated, official data showed Friday, possibly undermining calls for Beijing to let its currency strengthen...

China's exports in August totalled 139.3 billion dollars, growing 34.4 per cent year-on-year but at a slower rate than July, when they rose 38.1per cent to a monthly record high of 145.52 billion dollars.

Imports meanwhile picked up pace in August, growing a larger-than-expected 35.2 per cent to 119.27 billion dollars, suggesting the slowdown in the Chinese economy is not as severe as some had feared...

Property price appreciation has also slowed.

House prices in 70 major cities rose 9.3 per cent year-on-year in August, the National Bureau of Statistics said Friday, from 10.3 per cent in July.

However, reports on Saturday show that on the whole, the Chinese economy remains hot. From Bloomberg:

China’s industrial output rose at a faster pace than analysts estimated in August, signaling that the world’s third-biggest economy is maintaining momentum as growth moderates.

Production gained 13.9 percent from a year earlier, more than that 13 percent median estimate of 29 economists, a statistics bureau report showed in Beijing today. Consumer prices jumped 3.5 percent, the most in 22 months, as food costs climbed. Retail sales increased 18.4 percent...

Urban fixed-asset investment grew 24.8 percent in the first eight months of 2010 from a year earlier, the statistics bureau said today. That compared with a 24.9 percent gain for January- through-July. Producer price inflation slowed to an annual 4.3 percent pace from 4.8 percent...

In a separate statement, the central bank reported August new loans of 545.2 billion yuan ($80 billion) and a 19.2 percent increase in M2, the broadest measure of money supply. Both numbers were above economists’ estimates. The rebound in M2 growth was the first in nine months.

The latest reports suggest that Chinese authorities could tighten policy further.

Australia and New Zealand Banking Group Ltd. said today that China should gradually “normalize” interest rates, initially raising the deposit rate. Credit Suisse AG economist Tao Dong said that while he favors higher rates, policy makers may make no “imminent” move, preferring to support growth.

Policy-makers will be aware that despite its breakneck growth rate, China may have a large unemployment problem. From AFP/CNA:

With more than one billion workers in China, the world's most populous nation is facing a huge unemployment problem as only 780 million labourers are employed, the government said Friday.

The numbers included in China's "white paper" on the nation's human resources, released on Friday, suggested that around 22 per cent of China's labour force is without jobs.

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