Posted on 10 Sep 2013
China’s industrial output grew at the fastest pace in 17 months in August and the broadest measure of new credit almost doubled from July as a recovery in the world’s second-largest economy gains traction.
Factory production rose 10.4 percent from a year earlier, the National Bureau of Statistics said in a statement in Beijing today, compared with a median forecast of 9.9 percent in a Bloomberg News survey. Aggregate financing was 1.57 trillion yuan ($257 billion), the People’s Bank of China said, topping the median analyst estimate of 950 billion yuan.
Enlarge image Bicycle Factory
Today’s data suggest Premier Li Keqiang’s measures from tax cuts to extra spending on railways have helped halt a two-quarter slowdown as he seeks to defend the year’s 7.5 percent expansion goal. That may ease pressure for additional steps as Li and Communist Party leaders prepare for a November meeting to discuss policy reforms for sustaining long-term growth.
“The government growth target appears within reach, which reduces the chance of stimulus and allows the government to focus on reform,” said Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong.
The benchmark Shanghai Composite Index rose 1.2 percent to the highest close since June. The yuan was little changed at 6.1206 per dollar at 4:16 p.m. in Shanghai.
The government doesn’t release separate industrial data for January and February, which are distorted by the Chinese New Year holiday.
Growth Industries
Industrial production topped all 45 analysts’ estimates in a Bloomberg News survey, with projections ranging from 9.2 percent to 10.2 percent, following a 9.7 percent gain in July. Thirty-nine of 41 industries reported growth, including a 13.6 percent gain in ferrous metals and 12.3 percent in chemicals, according to the statistics agency.
Steel production rose 15.6 percent in August, up from 10.9 percent in July, and electricity output expanded 13.4 percent, compared with 8.1 percent the previous month.
Retail sales advanced 13.4 percent, while fixed-asset investment excluding rural households increased 20.3 percent in the January-August period, both topping estimates.
The median estimate for retail sales was a 13.3 percent advance after 13.2 percent in July. Fixed-asset investment was projected by economists to rise 20.2 percent in the January-August period, after a 20.1 percent gain in the first seven months of the year.
Auto Sales
A separate report today showed China’s passenger-vehicle sales gained the most in four months in August, led by sales of sport utility vehicles. Wholesale deliveries of cars, multipurpose and sport utility vehicles climbed 11 percent to 1.35 million units, according to the state-backed China Association of Automobile Manufacturers today.
China’s exports rose 7.2 percent from a year earlier, the General Administration of Customs said Sept. 8. That exceeded the 5.5 percent median estimate of analysts. At the same time, imports rose a less-than-estimated 7 percent from a year earlier, leaving a trade surplus of more than $28 billion.
Consumer prices rose 2.6 percent in August, the statistics bureau said yesterday, leaving room for extra stimulus if needed. The producer-price index (SHCOMP) fell 1.6 percent, the least since February.
Premier Li, in an opinion article published yesterday in the Financial Times, said the economy “will maintain its sustained and healthy growth,” with expansion around a 7.5 percent “lower limit” intended to ensure steady growth and employment.
Growth Forecast
Goldman Sachs Group Inc. last week raised its estimate for China’s economic growth for the third and fourth quarters, citing improving global demand and a stronger-than-expected domestic industrial recovery. JPMorgan Chase & Co. and Deutsche Bank AG raised their growth forecasts over the past month, bolstering optimism that Li will meet the government’s target for expansion this year.
Analysts surveyed by Bloomberg News last month gave a median estimate for 7.5 percent expansion this quarter and 7.3 percent in the October-December period.
Citigroup’s Ding said tighter credit may take a toll on the economy in late 2013 and early 2014, with the possibility that growth will decelerate next quarter.
China’s top solar-panel makers are returning to profitability following two years of losses as higher demand and prices drive up margins. JinkoSolar Holding Co. last month reported second-quarter net income of $8 million, its first profit since the third quarter of 2011, as sales jumped 43 percent from a year earlier.
In other economies today, French industrial production unexpectedly fell in July from the previous month, while Italy releases final figures for second-quarter gross domestic product, forecast to show a contraction.
