More confirmation of slowing in the Chinese economy, but so far it’s not too dangerous, but inflation remains a big concern.
And there were a couple of figures that suggested the slowdown is not as dramatic as previously thought.
Growth again eased, but industrial production, retail sales and car sales (a good proxy for domestic demand) were higher in the month.
Gross domestic product in the world’s second largest economy grew 9.5%, down from the 9.7% in the March quarter, 9.8% in the December quarter of last year, 9.6% in the September quarter of 2010 to 10.3% rate in the June quarter a year ago and well under the explosive 11.9% jump in the first quarter of 2010.
In other words, it’s the lowest quarterly growth rate for two years and the September quarter of 2009 when it was 9.1% annual.
The news helped boost sharemarkets across Asia yesterday after their release.
Hong Kong’s Hang Seng Index added 1.1% in the afternoon, regaining earlier losses; China’s Shanghai Composite added 1.4%, Japan’s Nikkei Stock Average rose half a per cent, Australia added 0.4% and South Korea’s Kospi advanced 0.9%, while Taiwan’s Taiex cut earlier losses to end little changed.
That surge continued into Europe and the US, helped by comments from fed chairman, Ben Bernanke, that the central banks was examining options for further easing of monetary policy to steady the sliding US economy.
All major market ended trading higher as a result.
The latest figures for China support the slowdown seen in the HSBC Markit monthly surveys of manufacturing activity for the last three or four months, which is the only consistently reliable monthly survey outside the government data.
The government’s purchasing managers survey has supported the slide findings from the HSBC survey.
But crucially for Australia, there’s no sign of a hard landing, although we have yet to see how the current credit crunch plays out.
In the first half, the economy expanded by 9.6%, down from the 9.7% in the second half of last year and well under the 11.1% rate in the first half of 2010.
But after easing for several months, industrial output from China’s millions of factories and workshops rose 15.1% in June, up from 13.3% in May, which is a significant rise coming amid reports of power cuts and falling imports and rising exports.
Output was up a solid 14.3% year-on-year in the first half, while fixed asset investment, a measure of government spending on infrastructure, rose 25.6%.
The June figure for fixed asset investment did show 1.04% contraction from May, according to the state-run Xinhua news agency.
Xinhua said, "According to the NBS data, consumer spending contributed 4.6 percentage points to the country’s GDP growth in the first half, investments made up 5.1 percentage points while foreign trade deducted 0.1 percentage points".
Meanwhile, investment in residential property rose to 1.86 trillion Yuan in the six months ended in June, up 36.1% year-on-year earlier levels.
Retail sales were up 16.8% year-on-year in the first six months and up 17.7% in June, much stronger than expected and above the 16.9% growth experienced in May.
Some analysts are worried that Beijing, anxious about inflation’s potential to trigger social unrest in the country of 1.3 billion people, may have gone too far in tightening monetary policy as it struggles to bring prices under control.
China’s consumer price index (CPI), the main gauge of inflation, rose 5.4%, (above the government’s target of 4% – remember it was 3% a year ago) in the first half of this year after the 6.4% annual rate in June, up from 5.5% in May.
The latest data from the China Association of Automobile Manufacturers (CAAM) showed a modest rise in China’s passenger car sales in June after falling for two consecutive months, up 6.1% month-on-month and 6.2% year-on-year to 1.1 million units.
Total passenger car sales in the first half of this year were 7.2 million units, up from with 6.7 million units in the corresponding period last year.
The explanation was the greater supply of Japanese cars, both imported and made in China.
Remember also the trade figures which showed the highest surplus in 8 months at just over $US22 bill as imports slowed and exports hit a record of more than $162 billion.
China’s trade surplus in the first half of this year fell 18.2% from a year ago to $US44.93 billion.
Exports were up 24% at $US874.3 billion and imports surged 27.6% to $US829.37 billion.
No wonder China’s foreign exchange reserves rose 30.3% year-on-year to hit $US3.1975 trillion by the end of June.
Foreign exchange reserves stood at $US3.166 trillion and $US3.1458 trillion by the end of May and April, respectively, according to the statement.
After jumping $US197 billion in the first quarter, reserves were up another $US153 billion in the second quarter.
So China’s reserves jumped by more than 10% in the first half year, or $US350 billion.
