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China’s recovery gains momentum (FT)

发表于 cjyyzb1
 



By Simon Rabinovitch in Beijing








Protesters shout slogans and hold signs as they march on a street in the Chaoyang district of Beijing©AFPA protest against a planned high-speed rail link in Beijing. Stronger growth has been attributed partly to spending on infrastructure


China’s economic recovery gained ground in November as industrial output and retail sales growth hit eight-month highs.

After slowing for seven straight quarters, the world’s second-largest economy appears set to finish 2012 with a moderate rebound, fuelled by looser monetary policy and a burst of government spending on infrastructure.

“We believe the economy will maintain its moderate upturn into next year,” said Liu Ligang, an economist with ANZ. “Fiscal policy has already had a strong impact on the real economy.”

Industrial output in China increased 10.1 per cent from a year earlier in November, up from 9.6 per cent in October, while retail sales rose 14.9 per cent year on year, up from 14.5 per cent. Both came in slightly ahead of most forecasts and were the highest since March.

With many European economies contracting and the US posting only anaemic growth, China stands out as a relative bright spot in the global economy.

However, many investors consider the Chinese upturn fragile, driven by government actions rather than private investment.

The acceleration in activity has also started to filter into a slight pickup in inflation. Consumer prices rose 2 per cent in November from a year earlier, rebounding from a 33-month low of a 1.7 per cent rise in October.

A sharp pickup in price pressures would constrain the government’s ability to stimulate the economy, but Zhang Zhiwei, an economist with Nomura, said inflation would remain below Beijing’s target of a 4 per cent rate for at least the next three months.

“Hence we believe the [People’s Bank of China] will maintain the current policy easing stance and keep credit supply loose, which will support the economic recovery to continue into the first half of 2013,” he wrote in a note to clients.

Since the middle of the year, Beijing has ramped up approvals for investment projects, particularly the construction of new rail lines and highways. The central bank has also pumped a large amount of short-term liquidity into the financial system through its aggressive use of open-market operations.

There have been concerns about the continued weakness of private investment despite the government’s push to kick-start the economy. There were mixed signals in November about the private sector.

Overall, private investment growth slipped to 25 per cent in the first 11 months of the year, down from a 25.2 per cent pace in the first ten months.

But the real estate market, which analysts consider to be the most important part of the Chinese economy, notched up a strong month.

Sales of new homes increased 9.1 per cent in the first 11 months of the year, jumping 3.5 percentage points from a month earlier. That helped fuel an increase in real estate investment, which climbed 16.7 per cent in the first 11 months, accelerating from 15.4 per cent in October.