Chinese data points to continued revival

A flood of data released by the Chinese government revealed that the economy remains well on the path to recovery. The data also prompted analysts to predict brighter prospects for one of the world's leading economies. China's industrial output rose 12.3% on year in August, the National Bureau of Statistics said today. The gain was wider than a 10.8% year-on-year gain in July and beat expectations for 12% rise, according to analysts. The major surprise came from the jump in bank lending, despite recent hints from Chinese bank regulators that the steep growth in new bank loans would be scaled back in the second half of the year. The People's Bank of China said that banks issued 410.4 billion yuan (US$60bn) in new loans during the month, up from 355.9bn yuan in July. That far exceeded estimates of lending shrinking to 320 billion yuan. China's broad money supply as measured by M2 expanded 28.5% from a year earlier, in line with consensus estimates for a rise of 28.4%.

China's consumer price index (CPI) eased 1.2% year on year, roughly in line with expectations for a 1.3% drop forecast by analysts. The producer price index (PPI) was down 7.9%, matching the poll's forecast. Declining prices gives Chinese central bank more room to keep interest rates at a four-year low. Retail sales rose 15.4% year on year, after rising 15.2% in July, the statistics bureau said today. The gain in retail sales was the biggest for the year after accounting for seasonal distortions caused by the lunar new year holiday. Urban fixed-asset investment for the January-August 2009 period rose 33.0% year on year, picking up for a 32.9% rise in the January-July period. Investment in real estate jumped 34.6% in August, up from a 19.6% rise in July. That compared to a 9.9% rise in property investment in the first half of 2009.

In China, the quickening expansion follows a 4 trillion yuan stimulus package, record lending and a rebound in property investment and sales that have countered a slump in the nation’s exports. Economists anticipate China’s GDP growth will accelerate to a 9.5% pace next year after an 8.3% rate in 2009, according to economists.