Article first published as Indiaâ€™s Q1 GDP Growth Results are Impressive, But Inflation is Still a Concern on Blogcritics.
It is widely believed that the Asian emerging economies are leading the world economy to recover from its worst crisis of 2007, since the ‘Great Depression’ of 1930s. After observing the GDP growth figure of 8.8% in the first quarter of FY 2010-11 (begins from April 2010 and ends in March 2011), it is understood that the expectations on India are not misplaced. The Planning Commission has released the data for Q1 last Tuesday. India’s GDP has grown by 8.8% from 8.6% of its previous quarter i.e. 4th quarter of previous financial year 2009-2010 despite partial withdrawal of stimulus measures. It is the highest growth rate since last quarter of 2006-07. The GDP growth of Asia’s 3rd largest economy after China and Japan is particularly notable because of the slow pace at which the GDPs of the developed economies like the US, Japan and the EU have grown in the same period.
As per the data released the robust GDP growth is driven by equally robust manufacturing sector growth that grew by 12.4 percent against 3.8 percent in the same period of last fiscal year. Agriculture and allied activities also fared well which expanded by 2.8% against 1.9% in Q1 of FY10. India’s Prime Minister Dr. Manmohan Singh has been advocating that agriculture sector has to grow by at least 4% for India’s GDP to grow by double digit figure. The Finance Minister Pranab Mukherjee expressed confidence that Indian GDP growth would register the targeted figure of 8.5%. The Deputy Chairman of the Planning Commission Montek Singh Ahluwalia is even more optimistic of GDP growth rate for the present fiscal surpassing the targeted figure of 8.5%.
MSN | Indian Express | 01/09/2010
Asian stock markets rose on Wednesday, rebounding from losses as Australia’s economic growth accelerated and Chinese manufacturing activity recovered in August. US stocks helped too. Japan’s Nikkei 225 stock average added 0.5 percent to 8,869.74 after hitting a 16-month closing low the previous day. Ongoing worries about the strong yen kept trading cautious. Hong Kong’s Hang Seng index rose 0.2 percent to 20,578.35, South Korea’s Kospi advanced 0.9 percent to 1,759.20, and mainland China’s benchmark edged up 0.1 percent to 2,642.45.
Leading regional gains, Australia’s S&P/ASX 200 jumped 1.7 percent to 4,478.8. Investors cheered new data showing that the nation’s gross domestic product rose a seasonally adjusted 1.2 percent in the April-June quarter. In China, manufacturing posted the first gain in four months. The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index, or PMI, rose to 51.7 in August from 51.2 July and 52.1 in June. Numbers above 50 show manufacturing activity expanding. "The rise in the PMI for August shows that China’s economy will not suffer a serious correction," the report said, citing federation analyst Zhang Liqun.
Reuters | Fri Jul 30, 2010 | 3:04pm IST
China has overtaken Japan to become the world’s second-largest economy, the fruit of three decades of rapid growth that has lifted hundreds of millions of people out of poverty. Depending on how fast its exchange rate rises, China is on course to overtake the United States and vault into the No.1 spot sometime around 2025, according to projections by the World Bank, Goldman Sachs and others. China came close to surpassing Japan in 2009 and the disclosure by a senior official that it had now done so comes as no surprise. Indeed, Yi Gang, China’s chief currency regulator mentioned the milestone in passing in remarks published on Friday. "China, in fact, is now already the world’s second-largest economy," he said in an interview with China Reform magazine posted on the website (www.safe.gov.cn) of his agency, the State Administration of Foreign Exchange. Cruising past Japan might give China bragging rights, but its per-capita income of about $3,800 a year is a fraction of Japan’s or America’s. "China is still a developing country, and we should be wise enough to know ourselves," Yi said, when asked whether the time was ripe for the yuan to become an international currency.
CAN IT BE SUSTAINED?
China’s economy expanded 11.1 percent in the first half of 2010, from a year earlier, and is likely to log growth of more than 9 percent for the whole year, according to Yi. China has averaged more than 9.5 percent growth annually since it embarked on market reforms in 1978. But that pace was bound to slow over time as a matter of arithmetic, Yi said. If China could chalk up growth this decade of 7-8 percent annually, that would still be a strong performance. The issue was whether the pace could be sustained, Yi said, not least because of the environmental constraints China faces. In an assessment disputed by Beijing, the International Energy Agency said last week that China had surpassed the United States as the world’s largest energy user. If China can keep up a clip of 5-6 percent a year in the 2020s, it will have maintained rapid growth for 50 years, which Yi said would be unprecedented in human history. The uninterrupted economic ascent, which saw China overtake Britain and France in 2005 and then Germany in 2007, is gradually translating into clout on the world stage.
Reuters | Thu Apr 15, 2010 | 1:21pm IST
China chalked up unexpectedly strong annual growth of 11.9 percent in the first quarter, prompting renewed calls for tighter policies to prevent the economy from overheating and stoking speculation on when it will loosen its tight grip on the yuan. The rate of expansion, the fastest since 2007 and above the median forecast of 11.5 percent in a Reuters poll, was flattered by a low base of comparison a year earlier, when the economy was reeling from the global financial crisis. But economists said the figures, released on Thursday by the National Bureau of Statistics, were unquestionably sturdy and would justify a firmer policy stance. Some, but by no means all, economists advocated a pre-emptive rise in interest rates to curb inflationary pressures, while Glenn Maguire with Societe Generale in Hong Kong said he favoured a prompt revaluation of China’s currency.
"Yuan stability and China’s stimulus package made an enormous contribution to global stability in the aftermath of the crisis, but now that China’s economy is growing by 12 percent, it’s time for China to share some of that growth with the rest of the world via appreciating its exchange rate," he said. The Commerce Ministry promptly reaffirmed its opposition to a stronger yuan. A spokesman said Washington was wrong to argue that, by holding down the currency, Beijing was giving Chinese exporters an unfair competitive edge and thereby contributing to near double-digit U.S. unemployment. The yuan, also known as the renminbi, rose modestly in the offshore forwards market, which was pricing in a 3.2 percent rise against the dollar over the next year. That was barely changed from the day before, even though Singapore had fanned market talk of a strengthening in the yuan by pushing up the value of the Singapore dollar on Wednesday in response to blistering growth data.
Bloomberg | April 12, 2010 | 22:00 EDT
Asia needs to start raising interest rates to prevent inflation from accelerating and avert the formation of asset bubbles as the region’s economies recover from the global crisis, the Asian Development Bank said. The region will probably expand 7.5 percent in 2010 after growing 5.2 percent in 2009, which was the slowest pace in eight years, the Manila-based lender said in its Asian Development Outlook report today. The 45 economies of developing Asia may grow 7.3 percent next year, the ADB predicts. Asia is leading a recovery from the deepest global recession since World War II after the region’s governments pumped more than $950 billion into their economies through increased investment, tax cuts and cash handouts to boost growth. Some central banks are already raising borrowing costs or taking steps to remove the excess cash in their banking system to fend off inflationary pressures.
“As recovery takes hold, inflation pressures, particularly in asset prices, may well start to mount in the region,” the ADB said. “Unusually easy monetary policy throughout the region cannot be kept for too long, and there is a need to revert to a normal stance.” Central banks in Malaysia, India and Vietnam have raised interest rates, while China has required banks to set aside more funds as reserves to drain money from the economy. Others, including Indonesia and South Korea, have left borrowing costs unchanged to buttress their recoveries.
“While additional fiscal measures are unlikely to be implemented this year, monetary measures are expected to continue to support the recovery process by maintaining an expansionary stance,” the ADB said. “Authorities must choose the right timing to withdraw the exceptionally accommodative monetary stance. If
Bloomberg | December 28, 2009 | 04:31 EST
Inflows of speculative capital, or “hot money,” are contributing to volatility in China’s stock and property markets, said Fan Gang, the academic member of the central bank’s monetary policy committee. While the inflows help make it cheaper to borrow, “it will also cause asset bubbles,” Fan said at a financial forum in Beijing today. He also said that capital will keep heading into emerging markets for “a considerable period” because of limited or zero growth prospects in the industrialized economies. Fan’s warning comes a day after Premier Wen Jiabao pledged to tackle excessive property-price increases in some parts of the nation, citing taxes and loan rates as possible tools. China’s policy makers are trying to secure an economic rebound while avoiding the stock and housing bubbles that plagued the U.S. this decade.
While the Shanghai Composite Index has fallen more than 8 percent from this year’s peak in August, it remains up 75 percent for 2009. China’s property benchmark, which measures prices in 70 cities, rose the most in 16 months in November. Fan is among Asian officials who have warned in recent weeks that the U.S. Federal Reserve’s policy of keeping its benchmark interest rate near zero is spurring global liquidity that’s heading to emerging markets. Continue reading
Reuters | BEIJING | Mon Dec 28, 2009 | 4:02pm IST
Beijing will not relax its efforts to sell Chinese products overseas in 2010 and seek a bigger share in the global market, China’s vice trade minister said on Sunday. China, which may have replaced Germany to be the world’s largest exporter in 2009, is a “big trading nation” but not yet, a “powerful trading nation,” vice commerce Minister Zhong Shan said. “China’s exports in 2010 will grow, and there’s no doubt about that,” Zhong said, declining to provide detailed forecasts. China’s exports were hit hard by the global financial turmoil, falling 18.8 percent in the first 11 months from a year earlier. But the market share for Chinese products has increased in 2009 as sales from other countries have fallen even more deeply, Zhong told a forum at the University of International Business and Economics in Beijing.
Other countries have blamed China’s unofficial policy of repegging the Yuan to the dollar since the summer of 2008 for making its products artificially competitive. China will feel pressure on its Yuan policy but will maintain “basic stability” Zhong said, in a reiteration of long-standing government policy. He said export growth is vital for China to drive economic growth and create jobs Continue reading
Reuters | Mon Dec 28, 2009 | 10:17am IST
Profits at Chinese industrial companies returned to growth in January through November, ending a year of declines and offering clear evidence of a stronger recovery for the country’s businesses. Industrial profit nationwide rose 7.8 percent in the first 11 months from a year earlier, the National Bureau of Statistics said on Monday. That marked a dramatic turnaround from a fall of 10.6 percent in the first eight months of the year, the last time the NBS conducted a nationwide survey. The NBS releases nationwide year-to-date profit data for February, May, August and November. Economists attributed the rise largely to a low base of comparison in the final months of 2008, when the world’s third-largest economy was hit hard by the global financial crisis. “But we cannot ignore that the sequential growth rate has also picked up since April,” said GAO Shanwen, chief economist at Essence Securities in Beijing.
The energy and natural resources sectors, including power, steel and nonferrous metals, saw strong improvement on recovering demand and prices, chiming with other indicators to suggest that the economy’s recovery is gaining momentum. Premier Wen Jiabao on Sunday gave a cautious outlook for the domestic economy in 2010, saying it was too early to wind down the government’s stimulus policies but that officials needed to be attentive to surging property prices and incipient inflation. Private Chinese companies, and foreign-invested companies, saw the biggest profit rebound.
Profit at private companies rose 17.4 percent from a year earlier compared with a rise of 6.6 percent in January through August. Profit at foreign companies rose 16.9 percent from a year earlier, compared with a 6.6 percent fall in the first eight months of the year. “The profit improvement of foreign enterprises and private sector players shows that the effects of government pump-priming stimulus measures have spread to more sectors, which means the economic recovery is on more solid footing,” GAO added.
Xinhua | 2009-12-13 | 21:23:17
Visiting Chinese President Hu Jintao and Uzbek President Islam Karimov met here Sunday to discuss the development of relations between their two countries. The two leaders were to exchange views on bilateral relations and regional and international issues of common interest, Chinese diplomats told Xinhua. Hu is in Ashgabat for a working visit at the invitation of Turkmen President Gurbanguly Berdymukhamedov. As guests of President Berdymukhamedov, President Hu, Uzbek President Karimov and Kazak President Nursultan Nazarbayev will participate in a ceremony to inaugurate the China-Central Asia natural gas pipeline Monday. One of two sections of the pipeline has been completed and the other section is expected to be operational next year.
The 1,833-kilometer pipeline starts at the border between Turkmenistan and Uzbekistan and runs through Uzbekistan and Kazakhstan before reaching northwest China’s Xinjiang region. Since China and Uzbekistan established diplomatic relations in 1992, the two countries have seen smooth development of bilateral ties. Leaders of the two countries have maintained frequent contacts, and bilateral cooperation has developed in all sectors. Two-way trade between China and Uzbekistan grew 14.6 percent year-on-year to 1.6 billion U.S. dollars in the first 10 months of this year. China and Uzbekistan have conducted close cooperation in the fight against the “three evil forces” of separatism, extremism and terrorism.
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.
“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. Continue reading
Xinhuanet | 2009-12-06 | 20:48:28
China will, without any doubt, be able to achieve the 8 percent growth in gross domestic product (GDP) this year, a senior Chinese economist said Sunday. Yao Jingyuan, chief economist with the National Bureau of Statistics, made the remarks at a fortune forum in Beijing. However, he warned that the Chinese economy will still face two major problems next year:
- Slumping overseas market demand and
- Weak driving force on domestic market.
Chinese economy rose 7.7 percent in the first three quarters, driven mainly by investment and consumption, but brought down by exports, Yao said. He stressed more efforts should be made on structural adjustment to shift dependence on the industrial growth to the comprehensive development of the agricultural, industrial and service sectors. Yao highlighted the importance to raise people’s incomes, add investment on livelihood projects and give full play to the role of consumption to boost economy. Meanwhile, China should turn its economic growth dependence from resources-intensive consumption to technology renovation, Yao said.
BBC NEWS | 2009/11/19 | 11:55:56 GMT
The Organisation for Economic Co-operation and Development (OECD) says growth and recovery are expected in 2010 in just about all world regions. For its 30 member countries, rich nations including the US and UK, it has more than doubled its growth forecast to 1.9% for next year, from 0.7%. But the OECD warns developed nations not to expect a smooth ride. It said growth was being “held back by still substantial headwinds” and would be “modest” for some time. The very measures that are helping richer nations to recover pose risks to that recovery, the OECD says. The UK, for example, needed to come up with a concrete plan to ease concerns about the stability of the public finances, it added. The OECD said the effectiveness of the UK’s asset purchase programme – the so-called quantitative easing programme – was uncertain.
The main danger for rich countries is unemployment, according to the OECD’s economic outlook. In the US, people are expected to continue to lose their jobs at a faster rate than new ones are created until sometime in the first part of next year. For the European Union, the picture is even worse. Unemployment may continue to rise in that region until 2011. A very different economic outlook is forecast for key emerging nations. China can expect to grow by 10%, India by more than 7%. The other two stand-out nations are Brazil and Russia. The OECD expects Brazil’s economy to rebound and expand by almost 5% after stagnating this year. Russia is also predicted to see that kind of economic improvement next year. But its turnaround will be even more dramatic. This year, it has experienced one of the worst economic slumps in the world – contracting by almost 9%. But those four so-called Bric countries are not part of the 30-strong OECD club. The one member nation whose economy should perform vigorously in 2010 is also an eastern one: South Korea should rebound to grow by 4.5% in both 2010 and 2011, after ending this year with almost no growth.
Reuters | Yahoo News | Thursday November 19 | 02:00 PM
The number of U.S.-dollar millionaires in China is expected to nearly double in five years, luring private bankers eager to help them invest an expected combined wealth over $7.6 trillion by 2013, Boston Consulting Group (BCG) said on Thursday. Global wealth declined last year for the first time since 2001, the consultancy said, but the number of Chinese individuals with household financial wealth of more than $1 million may grow to 788,000 by 2013 from 417,000 in 2008.
“We believe that China’s wealth market offers an attractive window of opportunity for banks,” Frankie Leung, a BCG partner in Hong Kong, told reporters in Beijing. “How banks should act to capture the opportunities and establish competitive positions would be a key strategic issue to explore.” Foreign banks, including HSBC Holdings Plc, Citigroup Inc and Bank of East Asia, have all started private banking businesses in China, competing for affluent clients with local rivals such as Bank of China. According to the consultancy’s definition, financial wealth includes cash, equities and bonds but excludes real estate and privately owned enterprises.
Globally, total assets of rich individuals declined by 11.7 percent to $92.4 trillion in 2008 due to the global financial crisis, the first decline since 2001, but BCG expects growth to resume over the next few years. “It will take roughly five years for the wealth pools to recover from the crisis and to reach a level that is comparable to wealth growth in 2007,” said Holger Michaelis, a partner and managing director of the firm. He added that the financial crisis has made rich people abandon complex products in favor of simple, less risky investments to protect, rather than grow their wealth.
BBC NEWS | 2009/11/18 | 10:10:44 GMT
CHINA AND US TIES
- Veto holders on five-member UN Security Council
- China is the biggest foreign investor in US treasury bonds, owning about $770bn (£457bn)
- China is the world’s biggest greenhouse gas producer at 20.7% of global emissions, followed by the US with 15.5%
- US imports from China dwarf its exports, stoking trade tensions
US President Barack Obama has met Chinese Premier Wen Jiabao on the last day of his much-watched visit to the rising Asian house. Trade disputes were expected to be on the agenda during Mr.. Obama’s lunch with China’s third-highest leader, who is responsible for the economy. Reports quoted the Chinese premier as having urged a “steady balancing” of trade with the US during the talks. Mr.. Obama later visited China’s Great Wall, before heading to South Korea. The US president, who is on a week-long tour of East Asia, is expected to focus on North Korea’s nuclear ambitions during talks in Seoul.
Before Wednesday’s meeting with the Chinese prime minister, Mr.. Obama said the Washington-Beijing relationship was now about more than trade and economics. He said it also covered climate, security and other matters of international concern, the Associated Press news agency Continue reading
BBC NEWS | 2009/11/17 | 08:42:04 GMT
The presidents of China and the US have agreed to work together to tackle some of the world’s most pressing problems. On climate change, Barack Obama said both sides agreed on the need for a comprehensive global deal in Copenhagen next month, not a political statement. Mr. Obama and Hu Jintao also agreed to push for North Korea to re-enter stalled talks on its nuclear programme. But underlying tensions were referred to, with Hu Jintao calling for joint opposition to trade protectionism. The two leaders held two hours of talks in Beijing’s Great Hall of the People, on the edge of Tiananmen Square. Both leaders then held a joint media event at which they read out statements, but took no questions from listening journalists.
Mr. Obama came to China for his first visit as president emphasising that China was now a major player on the world stage – and he turned to that point again in Beijing. “The major challenges of the 21st Century from climate change to nuclear proliferation to economic recovery are challenges that touch both our nations, and challenges that neither of our nations can solve by acting alone,” he said. With world leaders, meeting in Copenhagen next month to discuss how to tackle global warming, climate change is perhaps the most pressing issue to resolve. Mr. Obama appeared to raise hopes that a deal could be struck in Copenhagen. “Our aim there is not a partial accord or a political declaration, but Continue reading