China’s economic conundrum was nicely illustrated yesterday by the release of two statistics, one for power consumption for the 2010 year and the other the usual monthly news on property prices.
Property prices are, along with inflation, two of the most watched for statistics in China and have been for most of the past year.
Power consumption however is a good indicator of the overall health of the economy. It’s going very well, up more than 14% for the year to December.
But China says its hot property market continues to cool with another drop in the rate of price growth in the year to December.
But confusingly (again), the figures also showed a small rise in house prices month on month.
And figures for the year, while showing a slower rate of growth in the closing months of 2010, still tell a story of very strong demand and unchecked lending by banks.
Home prices in 70 major Chinese cities rose 0.3% month on month in December and 6.4% year on year, down from 7.7% in the 12 months to November.
The year on year rise of 6.4% was the smallest in 13 months, but the month on month rises were the 19th in a row.
The country’s National Bureau of Statistics said yesterday December was the eighth consecutive month of slowing growth from a peak of 12.8% in April last year, when the government stepped up controls to curb prices.
New home prices climbed 7.6% year on year last month and 0.3% month on month, while prices for second-hand homes rose 5% year on year and 0.5% month on month.
Property sales volume, in terms of floor space, was up 11.5% from a year earlier to 218.08 million square meters last month, and the value of sales rose 21.9% to more than 1.02 trillion Yuan (that’s around $US155 billion).
Property sales for the whole of last year surged 10.1% year on year to 1.04 billion square meters, and the sales value was up 18.3% to 5.25 trillion Yuan, it said.
Property investment last year jumped 33.2% year on year to 4.83 trillion Yuan. In December alone, 557 billion Yuan was invested in the real estate sector, up 12% year on year.
Reports say Chinese banks lent around 500 billion Yuan in the first 10 days of the month, which if true, made last Friday’s 0.5% lift in the reserve assets ratio to 20% more easy to understand.
The Statistics Bureau said that Sanya, a resort city in South China’s Hainan island, posted the biggest price advance in December among the 70 cities monitored, with values rising 43% from a year earlier. That’s followed by the 36% jump year on year in Haikou, the capital city of the island province.
The smallest year on year increases were 0.4% registered in Guangzhou, capital of South China’s Guangdong province, and Quanzhou, a city in Fujian province.
Shanghai, China’s financial center, is planning to trial a property tax, becoming one of the first cities in the nation to introduce the measure aimed at curbing speculative investment.
The rate and timing of the tax haven’t been made public.
But the data from the power industry tells of an economy growing strongly.
The country’s Electricity Council said yesterday that consumption rose 14.56% to more than 4.19 trillion kilowatt hours (kWh).
That was 8.12 percentage points higher than in 2009 and came despite the closure of 11 million kilowatts of generating capacity as part of the government campaign to get rid of older, highly polluting and illegal thermal power stations.
Consumption by manufacturing and industrial sectors jumped 15.4% year on year to about 3.09 trillion kWh.
Investment in China’s electricity industry, however, dropped 8.4% from a year earlier to 705.1 billion Yuan ($US107 billion) last year.
At the end of last year, installed power generating capacity was up 10% year on year to 962 million kilowatts.
About 26.5% of China’s installed generating capacity came from the non-fossil sectors, of which 213.4 million kilowatts was from hydro power, 10.82 million kilowatts from nuclear power and 31.07 million kilowatts from wind power, said the statement.
And Friday’s increase in the reserve asset ratio saw the Shanghai stockmarket tumble 3% yesterday, on top of a 1.3% fall on Friday before the announcement.
The Shanghai market is now off 16% in the past year.
