Good news for Australia, China’s strong economic growth remains on track after more solid economic stats for October.
House prices, industrial production and retail sales were all stronger during the month; inflation is not a problem, even though deflation is easing.
Exports fell, but were still better than forecast.
Imports were down, more than 6% though on a year ago (compared with the 3.5% fall in September) as shipments of some major commodities fell.
Iron ore imports fell 30% from September to around 47 million tonnes (over 64 million the previous month).
Despite the fall, steel production rose 2% in the month from September, despite the 8 day holiday at the start of October.
Copper imports (in their various forms) were down 34% from September.
These falls indicate that China may have finished restocking for the time being.
And, in an interesting development, bank lending in October fell noticeably, either a slowdown of the sort predicted earlier in the year by economists, or that the central bank wants to limit the chances of asset bubbles developing.
Industrial production rose 16.1% from October 2008, the best in a year (and up around an estimated 15.9% in September).
Power generation was up 17.1% over the same month last year, the fifth month in a row of increases.
Steel production rose to 51.75 million tonnes last month from the 50.71 million tonnes in September.
That was up 42% on October of last year when production was falling as the global economy slowed, pulling China down with it.
Steel production for the first 10 months of this year totalled 472.47 million tonnes, up 10.5% on a year ago.
China now looks like producing around 575 million tonnes of steel in 2009, an all time high.
Retail sales jumped 16.2%, a bit ahead of September and urban fixed investment had another month where the annual growth figure was solid at 33.1% for the first 10 months of this year.
The growth rate was 5.9 percentage points higher than that in the same period of last year, but 0.2 percentage points lower than that in the nine months to September.
The rise in retail sales was the best since last December (excluding the Lunar New Year period of January-February).
House prices in the 70 biggest cities across the country rose 3.9%, a sharp 1.1% more than the 2.8% annual figure in the year to September. That could be a small warning bell.
Car sales were also stronger in the month.
The People’s Bank of China said banks extended 253 billion Yuan ($US37 billion) of new local-currency loans in October, half the compared with 516.7 billion Yuan ($US75.6 billion) in September.
So far this year, new loans have totalled 8.92 trillion Yuan, much of that coming in the first half of the year.
Economists said that the bulk of the lending would be front loaded into the June half and that there would be a noticeable slowing in loan growth in the second half, which there has.
As well, the central bank has clamped down on so-called bill financing for short term periods which is one way stimulus money has been lent into the stockmarket.
Japan reported that a better than expected 10.5% rise in machinery orders in September, which is an encouraging sign that business may be starting to spend more on investment.
Overseas demand for China’s products continue to recover,
The statistics bureau said the trade surplus climbed to about $US24 billion in October, the highest level since December, excluding the seasonal distortions in January and February of this year (when monthly figures were combined).
Consumer Price deflation seems to be ending: the CPI fell by 0.5% in October from the same month of last year, the smallest drop since the declines began in February.
Producer prices dropped 5.8% (annual) in October, down from the 7% plus figures of recent months. China this week allowed petrol and diesel prices to rise in response to higher world prices.
Moody’s Investors Service raised China’s debt rating outlook to “positive” from “stable” on Monday, citing the government’s successful stimulus spending package as a major reason for the upgrade.
The downturn in lending helped reinforce comments by a senior central bank official about China’s monetary policy.
China doesn’t have a timeline for ending its "loose" monetary policy, a central banker said yesterday ahead of data likely to show the nation’s economic recovery is strengthening.
The China Daily website reported that the country will maintain its policy stance "at present", according to comments from Ma Delun, deputy governor of the People’s Bank of China, in Mumbai, India.
Chinese banks have boosted lending dramatically this year to push stimulus spending into the system.
China’s State Council said last month that it would maintain a "moderately loose" monetary policy, balancing the need for growth with managing "inflationary expectations".
Mr Ma said policymakers were noting expectations for prices to rise and were able to use "all kinds of market-adjustment instruments".
For the first time in two years a senior Chinese official made mention of currency values in a comment on the economy, suggesting that the Government might allow the Yuan to float off its current, semi-fixed rate.
