No real surprises from the December quarter and 2013 GDP data for China, according to the preliminary figures released yesterday. In fact it was something of an anti climax.
Growth in the final quarter was at an annual rate of 7.7%, down slightly from the 7.8% annual rate for the previous three months.
That left growth for the year as a whole at 7.7%, unchanged from 2012, and a bit better than what all the experts were suggesting nine to 12 months ago. It was still the slowest for a number of years.
That boosted GDP for the year to around $US9.17 trillion as the economy added more than $US650 billion in value.
The news provided a brief boost for the Aussie dollar and Asian markets, but the widespread expectation for a slowing left no surprises for investors to confront.
BHP Billiton and Rio Tinto shares edged higher, but the dollar fell in overnight trading (the closure of the US for a holiday didn’t help).
For Australia, the news was ‘good’ news in that there were no downside surprises to enliven the continuing bearish sentiment there is about China’s outlook and Australia in world markets.
GDP was unchanged on 2012’s figure principally due to the dose of stimulus spending in the second and especially third quarters of 2013, the effects of which slowed into the 4th quarter.
That was seen on a quarter on quarter analysis (similar to the way Australia reports GDP growth and not the annual rate for each quarter which is the US method). On a quarter on quarter basis, GDP slowed in the 4th quarter to 1.8% (GDP), from the 2.2% in the September quarter. Still that’s an annual rate of 8% for the last half of the year, which was encouraging.
The 7.7% outcome was pretty strong, as it saw GDP top the $US9 trillion mark by the end of the year, second only to the US (which is forecast to grow by 3% this year, according to the flow of updated forecasts emerging on Wall Street). That would be America’s fastest growth in 9 years.
China GDP Annual Growth Rate 2Y – Flatlining Chinese GDP data a bit of an anti-climax
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The Chinese government announced earlier this month that 2012’s final GDP reading was 51.95 trillion yuan ($US8.52 trillion), 52.8 billion yuan higher than the preliminary reading released in September, the National Bureau of Statistics (NBS) said Wednesday. The revised GDP growth was left unchanged at 7.7%, according to the statement from the government’s statistics bureau.
Fixed-asset investment in January-December, usually one of the main drivers for Chinese growth, rose 19.6%, slightly softer than expectations.
Industrial output, rose 9.7%, which was softer than the 10% rate seen in the 11 months to November, and another indicator of weak demand at home and from offshore for Chinese goods and exports.
The slowing expansion in output was underlined by the country’s export performance in December and the year.
Chinese exports rose 4.3% in December from a year earlier, while imports rose 8.3%, leaving a trade surplus of $US25.6 billion for the month. China’s annual trade surplus reached $US259.75 billion last year up 12.8% from the previous year.
Exports from the world’s second-largest economy rose 7.9% to $US2.21 trillion, while imports were up 7.3% to $US1.95 trillion. The country’s total trade in goods for last year came to $US4.16 trillion, up 7.6%, which was just under the country’s target of 8%.
For the year as a whole, the 7.7% growth rate was just above the official 7.5% target.
The 2014 target will be known in March after the usual annual meeting of the country’s parliament. But local and foreign economists are forecasting growth in a range of just over 7% to around 7.6%, with the consensus for another weaker year.
For the whole of 2013, the government said all major sectors saw a year-on-year rise, with the auto industry topping the list, expanding production by 14.9%, thanks to unexpectedly higher demand than forecast with sales hitting an all time record of 21.98 million vehicles.
Output of chemical products grew 12.1%, while non-metal minerals production grew 11.5%, computers, telecom and electronic products increased 11.3%, ferrous metals 9.%, cement grew 9.6% and textiles expanded by 8.7%.
For Australia the important news was in crude steel production which grew 7.5% to around a record 770.2 million tonnes in 2013. That was more than double the 3.1% rate seen in 2012. The more than 53 million tonnes of extra steel produced last year helps explain why demand for iron ore was strong for all the year and why iron ore prices remained above the $US130 mark instead of dipping after the strong rise in the March quarter.
China’s iron ore imports in December dropped 5.7% from the previous month’s record high to 73.38 million tonnes. But the strong demand for steel left imports for the full year at a record-high of 820 million tonnes, up 10% from 2012.
That was considerably more than forecast by anyone and made a mockery of the doom and gloom about demand and prices from a host of sources, both inside the Chinese steel industry and among investment and other analysts in offshore markets.
Coal imports were also up more than 10% last year, but that was down from the 13.2% rate seen in 2012.
In a note yesterday, ANZ economists forecast China’s 2014 GDP to grow by 7.2%, but Merrill Lynch forecast growth of 7.5%.
