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China Center Dataflash: February data point to weak first quarter

This China Center members-only Dataflash provides a brief interpretive summary of China’s official monthly economic data release – March 2012 (February 2012 data)

  • As expected, inflation fell significantly in February to 3.2 percent from 4.5 percent in January.
  • The headline trade data for February is particularly eye catching, producing a 31.5 billion USD trade deficit, the largest in years. However, looked at in full context – i.e. taking the January-February period together – the trade numbers show a more moderate slowdown than the top line figures suggest. 
  • New loans issued by banks increased by 711 billion RMB in February, slightly down from 738 billion in January. Total loan growth ticked up to 15.2 percent y-o-y from 15 percent the month before.
  • The seemingly more favorable dynamics in the banking system have allowed relatively robust loan growth and also seem to have eased rates in the interbank market (along with the reserve requirement cut in late February).
  • Industrial and investment data from the first two months of 2012 showed a continued slowdown in growth.
  • The authorities seem complicit with slower economic growth. As such, MNCs in China should start actively planning for potential slower growth scenarios for the country.

 

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