China Center Data Flash: September data - a glimmer of light, but not yet out of the tunnel
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This China Center members-only Data Flash is a brief interpretive summary of China’s official monthly economic data release for October 2012 (September 2012 data). Key points include:
- Chinese GDP growth slowed to 7.4 percent y-o-y in the third quarter, from 7.6 percent in Q2. The slowdown was in line with expectations and registered the 14th quarter of slowing y-o-y growth in China. However, data released for September appeared to indicate that growth may have stabilized further.
- Some analysts have pointed out that through the first three quarters of the year, 55 percent of economic growth reportedly came from consumption. Investment had a 50.5 percent share (exports subtracted 5.5 percent from growth). While an uptick for consumption as a growth driver appears positive, most of that increase occurred in the first quarter, when consumption counted for 6.4 percentage points of the overall 8.1 percent y-o-y growth.
- Growth in industrial production increased to 9.2 percent y-o-y in September from 8.9 percent in August, as the industrial sector appeared to benefit from increased infrastructure activity. Still, average growth for the quarter was down to 9.1 percent y-o-y, from 9.5 percent in Q2, and 11.1 percent in Q1.
- Inflation retreated slightly in September falling to 1.9 percent y-o-y from 2 percent in August. The reduction came in large part from a slowing of food price rises in the month. Food inflation fell to 2.5 percent y-o-y from 3.5 percent in August, as non-food inflation picked up somewhat by expanding 1.7 percent y-o-y from 1.4 percent in August.
- Fixed Asset Investment (FAI) accelerated in September, growing 20.5 percent y-o-y for the year-to-date, up from 20.2 percent for August. This growth implies a y-o-y expansion of 23.1 percent for September alone, up from 19.4 percent in August. The bulk of the increase in September’s investment data came from significantly increased infrastructure spending.
- New bank lending for September reached 623 billion RMB, falling short of market expectations of 700 billion RMB. However, the overall credit picture improved somewhat for the month.
- Even trade fared better than expected in September, although once again the numbers were far from spectacular. Exports increased by 9.8 percent y-o-y, up from 2.7 percent in August.
- Overall, the official data from September appear to point to a possible rebound in economic activity. However, we still expect any growth rebound to be relatively mild, and we do not think September data presage a full recovery toward previous growth rates.