Consumer inflation stable, producer inflation still rising, but bank lending exploding.
That was January for China, the world’s about to become second largest economy.
Exports rose, as did imports, car sales hit a record.
No wonder the Chinese authorities have moved to slow lending by the country’s aggressive state-owned banks.
There have been two rises in official market rates, a rise in the reserve asset ration of 0.5% and several directives to banks to cut or stop lending, especially in the final two weeks of January.
And that wasn’t hard to understand after the bank loan statistics were released yesterday.
Chinese banks pumped out a massive 1.39 trillion Yuan (or $US203 billion) last month, with much of that happening in the first three weeks.
Not coincidentally, property prices climbed as banks extended more credit in anticipation of monetary policy tightening.
The amount of loans exceeded the total for the 4th quarter of 2009 as a whole.
And it was four times the 379.8 billion Yuan lent by banks in December.
Seeing that the banks had lent 1.1 trillion Yuan by mid-January, the full-month total showed the success of subsequent attempts to curb the pace of credit growth.
Property prices in 70 cities rose 9.5% in January from a year earlier, the fastest increase for more than a year and a half.
Car sales hit a record 1.6 million last month, about the same level of total output of all types of vehicles.
Much of those purchases are being financed by bank loans.
Consumer prices rose a less-than-forecast 1.5%, down from 1.9% in December.
But producer prices jumped by 4.3%, the fastest growth since 2008.
That was a considerable rise, seeing wholesale prices ended months of falls in December with a rise of 1.7%.
There’s been a major acceleration, with the most probable explanation being the impact of the snowstorms and blocked ports in early January which disrupted transport and power.
Economists and foreign analysts now expect an interest rate increase after the about-to-start Chinese New Year celebrations have concluded.
Exports are solid, imports as well, although the figures for January were down on December.
Exports were up 21% to $US109.48 billion from January 2009 and imports up a huge 85.5% to $US95.31 billion.
But January last year featured some one-offs. Severe snowstorms which cut production (and boosted prices), the GFC (which cut demand for Chinese goods and Chinese demand for imports) and the Chinese New Year (which shut the place for a week or more).
Last month featured snowstorms (which had a marginal impact on output and demand), but Chinese New Year starts on Sunday, so output and exports this month will be down when reported in early March.
A much more accurate way of assessing January is to compare with December. On that basis, exports fell 16.3% from December and imports dropped 15.1%.
The trade surplus slipped from $US18.4 billion in December to $US14.1 billion January.
A notable fall from December was imports of iron ore.
China’s iron ore imports fell 25% in January to 46.6 million tonnes from the second highest level ever in December of 62.1 million tonnes.
Steel imports also fell (as did steel exports). A more probable factor could have been the cold weather and iced up ports in early weeks of January that cut imports.
And the higher imports in December seem to have been stockpiling ahead of the now expected storms in January and Chinese New Year.
In fact lower imports are forecast this month because of the New Year.
Chinese copper imports showed a similar trend, up 25% from a year ago, but down 21% from December.
