China reported late Thursday that the economy expanded at a
faster rate than expected in the fourth quarter, positive signs
for both the domestic and world economy. The National Bureau of
Statistics in China reported that the economy grew at an
annualized rate of 7.9 percent in the fourth quarter, better than
the 7.8 percent estimated by economists and much faster than the
7.4 percent rate seen in the third quarter.
Also, the National Bureau of Statistics reported key data in
industrial production, retail sales, and fixed asset investment.
First, the China reported that industrial production, a key proxy
and leading indicator for growth, rose at an annualized rate of
10.3 percent in December, faster than the expected rate of 10.1
percent and higher than the previous reading of 10.1 percent.
Strong industrial production data is positive news for the
short-term outlook for China.
Retail sales were also strong in December, rising 15.2 percent
in December on an annualized basis. Economists had expected
retail sales to rise 14.9 percent, the same rate seen in
November. The strong retail sales data reinforces the argument
that the Chinese economic authorities are somewhat successfully
engineering a shift from an export-driven economy to a domestic
Lastly, fixed asset investment, a key proxy for corporate
investment in long-term assets and a key driver of long-term
growth, rose 20.6 percent in 2012, slightly missing estimates of
a 20.7 percent rise, the rate seen in November. Although the data
missed expectations slightly, the 20.6 percent rise in investment
is still a strong reading and bodes well for China's future.
Economists at Credit Suisse took positives from the data, but
warned that some of the strength in the GDP figures was driven by
infrastructure investments by the government. Also, they fear
that the uptick in inflation recently could hinder any stimulus
hopes on the monetary side, which could cap any gains in growth.
However, they maintain their 8 percent growth forecast for 2013
The Shanghai Composite Index gained 1.41 percent overnight on
the data, marking the biggest weekly gain for the index of 2013.
Since hitting a four-year low on December 3, the Shanghai
Composite Index has broken out some 18 percent, and the less
followed CSI 300 Index has added 23 percent, formally in bull
market territory. Gains in stocks have been led by economically
sensitive sectors such as automobiles and real estate, positive
signs for the health of this market.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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