Through the Wire

China May Show Export Pickup Adding to Signs of Growth Rebound

November 9, 2012
| Economics
| Asia and the Pacific

Nov. 10 (Bloomberg) -- China may today report a sustained pickup in exports that would add to signs the worst of the nation’s slowdown is behind even as Premier Wen Jiabao warned that the global economic crisis isn’t over.

Shipments abroad rose 10 percent in October from a year before, about the same as September, after gains of less than 3 percent the prior two months, a government report will show today, according to the median of 30 estimates in a Bloomberg News survey. Data yesterday showed industrial output and retail sales accelerated.

Wen, addressing China’s Communist Party Congress, stressed the importance of meeting the government’s 7.5 percent growth target for this year, offering a platform to sustain reforms. The incoming generation of leaders to be named at the meeting will need to embrace changes from loosening controls over interest rates to raising the retirement age to ensure a shift to a high-income economy, according to the World Bank.

“The balance of economic forces is shifting more to the upside than the downside,” said Ren Xianfang, a Beijing-based economist with IHS Global Insight Ltd. “The government could not risk a downside shock this month and China’s leaders will be pleased that there have been no economic surprises for their Party Congress.”

Repercussions of the international financial crisis will linger for a few years, Wen said at a Nov. 8 panel discussion of the Tianjin delegation to the congress, the Xinhua News Agency reported yesterday. Achieving this year’s economic and social development goals is very important for reform and development next year and in the future, Wen said.

Import Gains

Commerce Minister Chen Deming said yesterday that October exports rose by more than 11 percent from a year earlier and imports increased 2.8 percent, Reuters reported.

Economists surveyed by Bloomberg News forecast a 3.4 percent rise in inbound shipments, up from 2.4 percent in September, based on the median estimate. The trade surplus was probably $27.3 billion, compared with $27.7 billion the previous month, according to a Bloomberg News survey.

Industrial production rose 9.6 percent in October from a year earlier, the National Bureau of Statistics said yesterday in Beijing. That exceeded the 9.4 percent median estimate of analysts surveyed by Bloomberg News. Retail sales growth of 14.5 percent picked up from September’s 14.2 percent. Consumer inflation cooled to a 1.7 percent pace.

Key Question

“The key question for investors is whether China’s economic growth has truly bottomed and is recovering,” and the “answer is firmly yes,” said Lu Ting, chief Greater China economist at Bank of America Corp. in Hong Kong.

The Communist Party began its 18th Congress in Beijing this week, where Vice President Xi Jinping will probably replace President Hu Jintao as general secretary of the party. At stake is the policy direction of an economy that Hu said is “unbalanced, uncoordinated and unsustainable.”

Even with an economic rebound, the yuan weakened 0.1 percent against the dollar this week, snapping 13 weeks of gains, on speculation the nation will struggle to boost export growth amid fiscal risks in the U.S. and Europe. The benchmark Shanghai Composite Index of stocks fell for a fifth day yesterday, capping a 2.3 percent loss for the week.

Government spending may be playing a key role in the pickup. Fixed-asset investment excluding rural areas increased 20.7 percent in the first 10 months of 2012 from a year earlier, compared with the 20.6 percent median analyst estimate and a 20.5 percent pace in the January-September period.

Government Projects

Spending on central government-invested projects rose 5.1 percent in the 10-month period from a year earlier, more than double the January-September pace, the data show.

Industrial-output gains were the most in five months and compared with 9.2 percent in September. Retail sales growth was the highest since March.

The CPI increase was below the 1.9 percent median estimate of analysts surveyed by Bloomberg News and compared with 1.9 percent in September. Producer prices declined 2.8 percent from a year earlier after a 3.6 percent drop in September.

Gross domestic product expansion slowed to 7.4 percent in the July-September period from a year earlier, the weakest in three years. Growth will probably speed up to 7.7 percent this quarter and to 7.9 percent in the three months through March 2013, based on the median estimate of analysts surveyed Oct. 18-22.

The People’s Bank of China will report October lending and money-supply data by Nov. 15. The central bank has paused from monetary easing since cutting interest rates in June and July.

“We believe macro data will remain strong” through the rest of the fourth quarter, Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong, said in a note yesterday.

--Zheng Lifei, with assistance from Ailing Tan in Singapore and Scott Lanman in Beijing. Editors: Scott Lanman, Paul Panckhurst

To contact Bloomberg News staff for this story: Zheng Lifei in Beijing at lzheng32@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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