Japan's growth rate hits 5.5 percent, China's trade surplus hits $23.8 billion

Japan's fourth quarter economic growth was even better than previously estimated. Bloomberg reports:

The world's second-largest economy grew at an annual 5.5 percent pace in the three months ended Dec. 31, the Cabinet Office said today in Tokyo. The growth was more than the 5.1 percent median forecast of 23 economists surveyed by Bloomberg News and above the February estimate of 4.8 percent...

Capital spending rose 3.1 percent, up from the 2.2 percent preliminary estimate and higher than the 2.8 percent expected by economists, today's figures showed. Inventories shaved 0.1 percent from growth, unchanged from the preliminary estimate...

Consumer spending increased 1 percent, less than the government's initial 1.1 percent forecast...

Unusually in recent years, this leaves Japan's economy as the fastest-growing among the major industrialised economies.

Japan's growth compares with 2.2 percent annualized growth in the U.S. and the 0.9 percent quarter-on-quarter expansion of the 12 nations that share the euro.

In spite of this, another rate hike by the BoJ may not be forthcoming.

An inflation rate that threatens to turn negative is [an] obstacle to a rate increase. Producer prices climbed 1.8 in February, down from 2.2 percent in January, as oil costs fell.

Meanwhile, exports continue to boost Japan's economy in the current quarter.

Japan's current account surplus in January widened 50 percent to 1.19 trillion yen ($10.1 billion) from a year earlier as exports increased, a separate report showed today.

Exports in January climbed 18.2 percent, the fastest pace in eight months, led by sales of automobiles, electronics and steel, the finance ministry said.

But even Japan's surplus now pales in comparison with China's. From Bloomberg:

China's trade surplus...in February...widened to $23.76 billion, the second-highest monthly surplus ever, from $2.5 billion, the customs bureau said today on its Web site. The median estimate of economists in a Bloomberg News survey was $7.3 billion...

Exports gained 52 percent in February. Imports climbed 13 percent. The surplus for the first two months was $39.6 billion, more than triple the same period last year.

The number looks unbelievably large to some.

"This number has some water in it and may not all be genuine merchandise trade," said Paul Tang, an economist at Bank of East Asia in Hong Kong. "There is some hot money flowing into China undercover with trading companies."

Possibly so, but it still suggests that some additional action by the authorities is likely.

"This clearly highlights that measures taken so far by China haven't borne fruit," said Tim Condon, an economist at ING Bank NV in Singapore.