Tuesday, 15 May 2012
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China Economy: Weak Economic Performance in April
British Embassy Beijing
The Chinese authorities released April’s macroeconomic data on 10th and 11th May (data is compared year-on-year, if not specified).
Exports grew by 4.9 per cent, compared with 8.9 per cent in March. This is lower than the market consensus at 8.4 per cent.
Imports grew by 0.3 per cent, compared with 5.3 per cent in March. Again lower than the market consensus at 10.9 per cent.
The balance of trade showed a surplus of $18.4 billion, compared with a $5.3 billion surplus in March. This is higher than the market consensus of $9.9 billion.
The consumer prices index (CPI) was 3.4 per cent, compared with 3.6 per cent in March. This is in line with market expectations.
Industrial production grew by 9.3 per cent, compared with 11.9 per cent in March. This is lower than the market consensus at 12.2 per cent.
Fixed asset investment grew by 20.2 per cent in the first 4 months of 2012, compared with Q1’s 20.9 per cent. This is lower than the market consensus at 20.5 per cent.
Retail sales grew by 14.1 per cent in April, compared with March’s 15.2 per cent. This is lower than the market consensus at 15.1 per cent.
Money supply (M2) grew by 12.8 per cent, compared with 13.4 per cent in March. New loans totalled RMB 682 billion (£68.2 billion) in April, compared with RMB 1 trillion (£101 billion) in March. Both are below the market expectations at 13.3 per cent and RMB 780 billion (£78 billion).
April’s macroeconomic data are worse than the market consensus. This suggests that China’s economic landing may be harder than previous expectations.
The trade data is particularly weak. While exports to the US remain strong, exports to the EU (China’s largest export market) contracted for the second consecutive month in April by 2.4 per cent, compared with a contraction of 3.1 per cent in March. The import data partly reflects lowering commodity prices, but also suggests domestic demand is weakening. The trade surplus surged quickly, and according to Capital Economics, this is the largest surplus in seasonally-adjusted terms since February 2009.
With inflation now below the 4 per cent target, and forecast to remain so, the authorities are likely to introduce further cuts to the required reserve ratio (RRR) and additional stimulatory policies. Social housing projects and the recently announced cuts to import tariffs should play a role in stimulating growth.
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