The evidence of the slow landing in China’s economy was strewn across the annual economic data released yesterday.
Retail sales, industrial production and economic growth all grew at rates much slower than seen in 2010.
Annual growth slowed to 9.2% from 10.4% in 2010.
But so far there’s no sign of a slide towards a hard landing, although many western analysts still assume that will happen this year, especially as Europe (China’s biggest export market) falls into recession.
The still falling property market contains the biggest threat to the Chinese economy and companies like Rio Tinto and Fortescue (See stories below).
The news saw major Asian markets rise sharply in afternoon trading, after the data was released.
The Shanghai Composite surged 4.2% to 2,298.38, while Hong Kong’s Hang Seng Index added 3.2% to 19,627.75.
Japan’s Nikkei Stock Average rose 1.1% to 8,466.40, Australia’s ASX 200 index was up 1.7% to 4,215.60. South Korea’s Kospi rose 1.8% to 1,892.74 and Taiwan’s Taiex added 1.7% to 7,221.08.
Further gains are likely today with markets in Europe and the US higher overnight.
But the slowdown in China is continuing and many foreign investors remain worried that a hard landing will occur, thanks to the weak property sector.
The Financial Times said that at a press conference held to unveil the latest figures, the spokesman for China’s National Bureau of Statistics expressed official concerns that things are likely to get worse in the coming months.
"In terms of the domestic and international situation 2012 will be a year of complexity and challenges so we should be fully prepared,” said NBS spokesman Ma Jiantang in a speech laced with words like “gloomy”, “complicated” and “severe".
"Most analysts, no matter whether they are bullish or bearish on China’s longer-term prospects, expect growth to slow significantly in the coming months, to well below an annualised rate of 8 per cent in the first quarter. Some are even predicting full-year growth as low as 7.5 per cent in 2012."
We will get further evidence on Friday when the so-called ‘flash’ estimate from the HSBC survey of Chinese manufacturing is released.
As well, economists say the full year data could see a further loosening of monetary policy by way of a cut in bank reserve ratios or even an interest rate cut in the next week before the Lunar New Year starts on January 23.
But China’s gross domestic product accelerated at a faster pace than expected in the fourth quarter, negating fears of a sharp slowdown in the country’s growth because of the woes of Europe.
The country’s GDP in December quarter grew an annual 8.9% from the same quarter of 2010, weaker than the 9.1% expansion recorded in the three months to September, but faster than the 8.6% growth tipped by many economists.
For the full year growth slowed to a 9.2% rate, down sharply from 2010’s 10.4%. Annual growth was 9.3% in 2009.
In fact the 8.9% pace was the slowest since the June quarter of 2009.
And while other monthly economic indicators also beat expectations in December, with retail sales climbing 18.1% from a year-earlier up from the 17.3% rate in November, the annual performance was slower.
Retail sales grew an annual 17.1% in 2011, down on the 18.9% growth seen in 2010.
Industrial output during the month rose 12.8% for a 13.9% increase for the full year.
But that was also sharply lower than the 15.7% growth seen in 2010.
Last week the government reported that consumer inflation rose 5.4% in the year after easing slightly to an annual rate of 4.1% in the final quarter.
The annual rate was still higher than the 3.3% seen for all of 2010, but the rate of growth in prices is slowing, thanks to falling food prices.
Producer prices were up 1.7% in the December quarter and they are also on the way down. For the year they rose 6%, but the annual rate has fallen sharply since peaking around 7% mid year.
2011 also saw a noticeable slowing in China’s trade surpluses as imports rose and export growth eased.
While China’s foreign trade surged 22.5% last year to $US3.64 trillion, the annual trade surplus fell 14.5% to $US155.14 billion.
The surplus has shrunk from $US295.47 billion in 2008, $US196.07 billion in 2009, and $US183.1 billion in 2010.
Exports rose 20.3% year on year to reach $US1.9 trillion, while imports rose nearly 25% to $US1.74 trillion.
In December alone, the country’s exports totalled $US174.72 billion , up 13.4% year on year.
Imports increased 11.8% year on year to $US158.2 billion and the trade deficit for the month rose to $US16.5 billion from $US14.8 billion in November.
