ROUNDUP China economic data shows economy slowing, but still in high gear
Wednesday, November 10, 2004 10:33:39 AM
afxpress.com
BEIJING (AFX) - The first batch of economic data since raising interest rates two weeks ago suggests that the Chinese economic juggernaut is continuing to charge ahead, if at a slightly slower pace, analysts said
The Ministry of Commerce said in a statement on its website that China's exports in the first 10 months of the year rose 34.5 pct year-on-year to 468.72 bln usd, while imports in the same period rose 37.2 pct to 457.75 bln usd
The ministry's release followed the National Bureau of Statistics which earlier said that China's industrial value-added output rose 15.7 pct in October, on a yearly basis, and 16.9 pct year-on-year in the first 10 months of the year
"If you adjust for a low base factor it does indicate some slowdown in industrial production which is consistent with the policy of the past few months of slowing investment and therefore demand for heavy industrial goods," said Deutsche Bank economist Jun Ma, who expects full year growth of around 14 pct from last year's 17 pct. These releases mark the first since the People's Bank of China raised one-year lending rates and deposit rates by 27 basis points apiece, the first rate hike in nine years, at the end of last month. Beijing is trying to further tighten the government's grip on the economic engine and dampen resurgent inflationary pressures after a batch of measures taken earlier this year showed signs of losing their efficacy
The industrial output data marks the slowest level of growth in three months, dragged lower by falling car production. Car output fell 14.2 pct year-on-year to 144,000 units in October as investors waited on car purchases amid falling prices and tough lending requirements foisted on commercial lenders earlier this year. Industrial output grew at 16.7 pct in the same period last year, and 17.0 pct in the first nine months of this year, the NBS said
Qi Jingmei, a researcher with the Macroeconomic Forecasting Department under the State Council Development Research Center said that, barring falling auto output, production remains at a high level
"The growth in recent months might be slower than earlier this year on a month-on-month basis, but if you compare it with the same month last year, it's still very fast," she said. The latest numbers are unlikely to dampen speculation about an imminent revaluation of the Chinese currency, currently pegged to the US dollar at around 8.27 yuan. Although economists are forecasting further hikes in interest rates in the coming months, Citigroup economist Huang Yiping told clients in a note earlier this week that raising borrowing costs to offset an undervalued currency could have a punitive effect on China's leveraged industries in the interior, leaving a revaluation as the only sensible option
"While export growth is slowing, it still outpaces export gains elsewhere in emerging Asia. Labor shortages in coastal firms, largely dedicated to exports, also hint at overheating," he said. "Accordingly, currency appreciation still appears to be a question of timing." In October alone exports rose 28.5 pct over a year ago to 52.53 bln usd while imports were up 29.3 pct to 45.43 bln usd. |
