China’s economic growth slows in line with forecasts «
Markets offered a briefly positive reaction to the result, along with other data for December, which were mostly in line with forecasts, though the improvements soon melted away.
China’s gross domestic product was 7.7% higher than a year earlier, the National Bureau of Statistics said Monday.
The rate marked an easing from 7.8% growth in the July-September quarter but beat a forecast gain of 7.6%, according to separate polls from Reuters and The Wall Street Journal.
On a quarterly basis, the economy grew 1.8%, slowing from 2.2% in the previous three months.
“The slowdown in the fourth quarter was caused by decelerating investment growth,” wrote RBS chief China economist Louis Kuijs. “Growth of what we consider largely credit-based investment — in infrastructure and real estate — has eased since June 2013, alongside the deceleration of expansion of” credit for the entire economy.
More numbers, few surprises
Among other data released Monday, industrial production slowed to 9.7% annual growth in December, from November’s 10% gain. The Wall Street Journal and Reuters surveys put the median forecast at 9.8%.
December retail sales increased by 13.6% compared to the year-earlier period, after a 13.7% rise in November, with the result matching the projected increase from the Reuters survey.
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Urban fixed-asset investment (FAI), reported only on a year-to-date basis, was up 19.6% in 2013, after the January-November reading showed a 19.9% rise. The Wall Street Journal had tipped a 19.8% rise. The metric is closely watched as a proxy for construction activity in China.
The FAI statistic was probably the most negative of the numbers, Bank of America-Merrill Lynch economists said, estimating that on a monthly basis, growth fell to 17.1% in December from 18.2% in November.
However, they added that “there are usually quite significant FAI data revisions at year-end,” and the drop could be much less than suggested by Monday’s results. And judging by China’s cement output, which they saw as a better barometer of construction, “we believe housing and infrastructure spending could have stayed relatively stable … over the past couple of months.”
Policy may hold course
As for the policy implications of the data, the Merrill Lynch economists expect little change to Beijing’s economic stance in 2013.
“We expect the Chinese government to set the same targets on GDP growth, consumer price index inflation and M2 [money-supply] growth in 2014 as those in 2013, at 7.5%, 3.5% and 13.0% respectively,” they wrote, forecasting “the government to maintain neutral monetary policies and execute slightly more proactive fiscal policy in 2014.”