More good news from China as the recovery gathers pace.
In fact the rebound in the economy, thanks to the $US585 billion stimulus package, is maturing well, with imports telling us domestic demand is growing faster than export demand, but housing is starting to crank up.
The contrast with the US is dramatic.
Figures out this week in the uS point to low inflation, stabilising unemployment, stuttering retail sales and soaring home foreclosures as loans go bad.
There is nothing like that in China.
The improving trade performance has boosted the country’s huge foreign exchange reserves to even higher levels.
China’s foreign reserves, already the world’s largest, hit a record high $US2.273 trillion by the end of September as surging asset prices and the economic recovery attracted investment into the country (Source Chine Daily).
This was up 19.2% on a year ago.
The People’s Bank of China said in a report that the reserves rose about $US141 billion between July and September, from $2.13 trillion at the end of June.
The central bank said China’s foreign exchange reserve added by $US43 billion in July, $US36.2 billion in August and $US61.8 billion in September.
Given that China’s trade surplus fell to $US12.9 billion in September, compared with $US15.7 billion in August, the rise in the reserves in the same months points to continuing big inflows of so-called ‘hot capital’ or money spirited into the country via smuggling, or more likely through over pricing of exports.
This has been going on since the June quarter as the recovery in the Chinese economy became clearer.
In the first three quarters of this year the country’s foreign exchange reserves have risen by $US326.6 billion, $US50.7 billion less than the same period last year.
At the end of June, China’s foreign exchange reserve surpassed $US2 trillion for the first time.
Even though bank lending was stronger than expected in September, as were the trade figures better than expected, there’s no sign of a bubble developing in property.
Housing prices in China’s 70 largest and medium-sized cities rose 2.8% in September compared with the same month of 2008.
That was up from the 2% rise in August, compared with August 2008.
That’s a solid rise (larger when the current price deflation is taken into account), but on face value nowhere near the 2%-3% a quarter (over 10% annual) that many Australian house prices are growing at, nor similar big gains being recorded in Hong Kong, South Korea and Singapore.
But there are local hotspots; in the south Shenzhen led the gains, with an 11.1% rise in the 12 months to September.
And home sales jumped 73.4% in the first nine months of 2009 from a year earlier to 2.75 trillion Yuan.
Investment in property development was up 17.7% in the same period and has been accelerating in the past three months.
No wonder Chinese media have been carrying stories of strong selling activities in the recent Golden Week holiday, which marks the end of summer and the approach of Autumn.
Power consumption rose at a faster rate than forecast last month.
According to China’s National Energy Administration power consumption last month was up 10.2% from the same month in 2008.
Consumption rose 2% from August and was up 1.4% in the first nine months of 2009 compared with the same period of 2008.
Consumption by metals processing industries fell, but service industries and the rural sector consumed more power compared with a year earlier.
Foreign direct investment in China continued to recover in September, jumping 19% from the same month of 2008 to $US7.9 billion, according to Commerce Ministry figures.
The number of newly approved companies with foreign investment was up by almost 11%; up from the 7% annual rise in August, and significantly higher than the falls in June and July.
The figure does not include stocks and other financial assets.
Actual foreign direct investment for the first nine months of the year totaled $US63.8 billion, down 14% because of the falls recorded in the first half of the year.
Bank lending in the first nine months totalled 8.67 trillion Yuan, far exceeding the government’s initial target of 5 trillion Yuan for the year.
Banks loaned 516.7 billion Yuan last month (just over $US75 billion), up from 410.4 billion Yuan in August.
Some analysts are starting to focus on what the government will set as the 2010 loan target.
China’s iron ore imports hit 64.5 million tonnes in September, up 65% year-on-year and 30% from August, a surprisingly big rise.
Steel prices in China, which hit a 10-month high in early August, are now falling with the price setter, Wuhan Iron and Steel cutting November rates for major steel products by up to 400 Yuan ($US58.59) per tonne compared to October.
Copper imports jumped in September, news that surprised as a 4th successive monthly drop had been forecast.
Imports totalled 399,052 tonnes in September, 23% more than August.
As reported yesterday exports in September fell 15.2% year-on-year to $US115.9 billion, while imports dropped 3.5% to $US103 billion. Exports rose 6.3% from August, imports 8.3%.
