China recovery gathers strength


BBC NEWS | 2009/12/11 | 08:04:19 GMT

China has shown further signs of economic recovery with factory output surging and its export slump easing. Industrial output in November rose to its strongest position since June 2007, rising 19.2% from a year earlier. Consumer prices also grew year-on-year in November for the first time in 10 months. The index rise of 0.6% beat analysts’ expectations of 0.4%. November’s year-on-year fall in exports of 1.2% was the slowest of 2009, although growth had been expected. Imports rose 26.7% in November from a year earlier. This meant the country’s trade surplus – the difference between imports and exports – narrowed to $19.9bn in November compared with $24bn in October.

‘Strong figures’

“China’s trade is certainly recovering thanks to tariff cuts and efforts to keep the currency rate stable,” said Yi Xianrong at the China Academy of Social Sciences. Analysts said they expected exports to start growing in the coming months. There was further good news on domestic retail sales, which the Chinese government is actively trying to stimulate. The National Bureau of Statistics (NBS) said that sales were up 15.8% in November compared with the same time last year. The latest data on output, exports and sales generally exceeded the expectations of economists. “This is a strong set of figures,” said Lin Songli at Guosen Securties in Beijing.     

‘Tightening policy’

Earlier this week, the Chinese government said it would maintain its current fiscal and monetary stimulus for the moment, and look specifically to boost domestic demand. Mr. Lin said the latest figures would not convince the government to rein in its stimulus measures. However, some analysts speculated that rising consumer prices may lead the government to think again. “Higher housing costs and food prices are already having an impact on Chinese households, and any further increase in inflation in the months ahead will likely put increasing pressure on Beijing to start tightening policy,” said Brian Jackson at the Royal Bank of Canada.

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