A big week for China and Australia.
The final December monthly and quarterly and the full 2009 year figures for economic growth, inflation, industrial production retail sales and fixed asset investment are due out on Thursday around 12.30 pm (Sydney time).
That will fill out the picture we already have of the Chinese economy and what’s been a year of rapidly accelerating growth.
We have already had some figures showing a solid month for exports (and imports) in December, although December 2008 was very weak (so the comparison looks better than it is).
But car sales hit a record high of more than 13 million with domestic production at record levels; power consumption rose, especially from May onwards, steel and coal production were stronger, according to informal figures.
Iron ore, copper and aluminium imports jumped sharply in December, bank loans soared for the month (and the year) and central government taxes revenues rose more than 9% to over $US900 billion.
China said Friday that new Yuan-denominated lending last year hit a record 9.59 trillion Yuan (or $US1.4 trillion), almost double that of the previous year and the 5-trillion-Yuan annual target the government set at the beginning of last year.
Housing prices jumped sharply in December, up nearly 8% in 2009 and 1.5% from November.
That continued the accelerating trend in the closing months of 2009.
Housing prices in China’s 70 large and medium-sized cities rose 7.8% in December 2009 from a year earlier.
The National Bureau of Statistics (NBS) said last week the annual rise for the year to December was sharply up on the 5.7% annual rate for the year to November.
Prices of new houses in December rose 9.1% from the same month last year, and were up 1.9% from November.
In December, prices of second-hand houses in the 70 main cities rose 6.8% from the previous year, and 1% from the previous month.
Some commentators say that’s a bubble: well it’s not.
Australian house prices have risen far more strongly in the past year than those in China, as have house prices in Hong Kong, parts of Singapore and South Korea.
But the government has moved to cut speculation in property (many Chinese buy new homes and apartments as a form of ‘super’ for their future and leave the buildings vacant).
Deposits and taxes have been changed to force people to hang onto these properties for longer rather than ‘flipping’ them to the next buyer at a profit after a few months.
The government has also moved to tighten monetary policy by forcing banks to increase their reserve asset ratios by 0.50% from yesterday to 16% (the first increase for 18 months), lifted market rates 10 days ago to try and cool bank borrowings and the country’s foreign exchange reserves hit almost $US2.4 trillion by the end of 2009, up 23.3% year on year.
So the optimists are forecasting growth for the December quarter in a range of 10.5% (pessimists) for 11.0% or more (optimists are around 11.5%).
Annual GDP growth of around 11% would confirm that China saw very strong growth in 2009, especially in the last half, thanks to the spending from the government and the rush to lend money by banks, but also to rising demand for exports and from consumers.
China grew by 6.1% in the first quarter of 2009, 7.9% in the second quarter and 8.9% in the third.
That means that if GDP grew at around 11% in the December quarter, annual GDP growth for the year will be around 8.5% or more.
Growth above 9% will see the bears bellow ‘crash, bubble, doom’ even louder.
But the reality is that China won’t crash, even as the government moves to try and control the economy.
It may slow, it may develop a few wobbles, but the government will absorb all bad debts from the current lending surge (as it has done so in the past) because the banks are state-controlled.
China is under-invested in infrastructure (roads railways etc), even after the splurge of the past year.
Exports rose more than 17% in December from a year earlier, and imports were up more than 55%.
But for the year exports were off 16% and imports were down more than 11%.
But that performance has intensified a central puzzle about China: its foreign reserves grew much, much faster last year that expected, even after the 34% fall in the trade surplus.
For the entire year, China’s reserves rose $US453 billion, $US35 billion more than the increase in 2008.
While the reserves grew by just $US10 billion in December, that followed rises of $US56 billion and $US60 billion.
That exposes the major underlying problem for China; there’s been a flood of hot money into China, hard as that seems with the government tightly controlling capital inflows and outflows and refusing to allow the Yuan to rise against the US dollar and other currencies.
The country’s trade surplus fell in 2009 to $US196.1 billion, falling for the first time since 2003 and short of 2008’s record $US295.5 billion.
Now the full year figure for last year is more than $US260 billion under the rise of the country’s foreign reserves (Chinese foreign debt rose to around $US360 billion at the end of last year).
This could be another example of China’s ‘rubbery’ statistics, but when taken with the intransigence about t
