Inflation surging, house prices still rising on a month to month basis, bank lending up, industrial output higher, car sales and production higher, commodity imports surging, exports up; the Chinese economy is rushing head long into 2011 without a look back.
Two days of data releases for November on Friday and Saturday show clearly the country has a major and unresolved inflation problem, especially in food prices, that refuses to bow to official pressure to fall.
In recognition of the problem, the government again ordered banks to lift their Reserve Asset Ratios from next Monday, the third such order in a month and the sixth this year.
That this was ordered on Friday night, after the release of the trade, house price and car sales figures, and before the official release on Saturday of the inflation and industrial production data, tells us the government knew what was coming and moved quickly.
The Shanghai market rose 1.1% on Friday in a positive reaction to the smaller trade surplus (but higher exports and imports).
The reaction today won’t be so positive, especially after the consumer price index was revealed as rising a big 5.1% in the year to November, up from 4.4% in the year to October.
It was the sharpest jump in 28 months and the latest indication that inflation is a growing threat to Australia’s biggest export market.
Inflation was far above the government’s target level of 3% (the 2010 rate will be around 3.2% or more, according to analysts).
The main driver was the 11.7% jump in food prices in the month, the biggest rise for two years and up from the 10.1% annual rate in October.
That was despite the moves by the government last month to try and free up markets and cut prices for diesel fuel, grains, garlic and ginger and a host of other foodstuffs.
Food prices rose 2% month on month from October, a real worry because the pace seems to be accelerating.
Non-food consumer prices rose by an annual 1.9% in November, up from 1.6% in October.
Producer prices worsened, rising by an annual 6.1% in November, up from 5% in October.
That was a month on month rise of a sharp 1.1%.
Analysts have said November could mark the peak for inflation, claiming official figures from the commerce ministry show vegetable and other food prices eased in recent weeks after Beijing took steps to boost supply.
Other key data showed industrial output from China’s factories rose 13.3% on year, up from 13.1% in October.
That was even as the government continued to close highly polluting operators and rationed power to energy-intensive industries.
Factories have been getting around the power restrictions by using diesel generators to keep assembly lines churning out goods, leading to a nationwide shortage of the fuel, hence the higher imports.
Fixed asset investment in urban areas, a measure of government spending on infrastructure, rose 24.9% over the January-November period, slightly faster than the 24.4% over the first 10 months of the year.
Retail sales, a key measure of consumer spending, jumped 18.7 % year on year compared with 18.6% in October.
New Yuan loans totalled 564 billion Yuan ($US85.45 billion) in November, taking the total for the year so far to around 6.4 trillion Yuan.
That means the full-year lending total will exceed the 7.5-trillion-Yuan target set at the start of the year.
Property prices in 70 major Chinese cities rose 0.3% in November from October and 7.7% year on year.
That was down from the 8.6% annual rate in October.
New home prices climbed 9.3% year on year in November and 0.4% month on month.
Prices for second-hand homes rose 5.6% year on year and 0.3% month on month.
Property investment rose 36.7% to 462.8 billion Yuan in November.
That brought combined investment in the first 11 months to 4.27 trillion Yuan, up 36.5%.
China’s trade surplus fell to $US22.89 billion last month from $US27.1 billion in October.
Exports rose 34.9% last month from November 2009 to $US153.33 billion while imports jumped 37.7% to $US130.43 billion.
The AMP’s chief economist and strategist Dr Shane Oliver says that as a result of last week’s data and the move to boost bank asset ratios "A further hike in interest rates is also looking imminent.
"Both export and import growth accelerated in November and economic activity indicators remained strong suggesting that the economy is healthy enough to be able to bear further tightening.
"However, the growth in economic activity indicators remains down from the blistering pace seen earlier this year, recent weekly data is showing a fall in food prices suggesting that price controls and supply boosting measures are starting to work in which case inflation is likely at or near its peak and measures to slow the property market appear to have worked with house price inflation slowing further over the year to November.
"As such we remain of the view that policy tightening won’t get aggressive enough to crunch the Chinese economy."
