The Organization of Economic Cooperation and Development, or OECD, upped China GDP growth forecast to 9.3% from 8.5% earlier this year on Tuesday.. The report is in line with recent upgrades from the World Bank, Standard Chartered and Barclays. China introduced a 4 trillion yuan ($586 billion) government stimulus program in November 2008 to offset global economic slowdown. And while exports, the former growth engine for China, fell heavily domestic infrastructure related activities are offsetting diminishing exports.
Here is a list of recent upbeat commentary from respected sources.
Su Ning, Vice governor or China's central bank, delivered a speech about economic growth and lending practices, suggesting that loose lending will continue to help revive the economy.
Wen Jiabao, Premier of China, reinforced government efforts to keep lending loose to simulate the economy while visiting Hebei Province over the weekend. In an effort to reinvigorate the third largest economy in the world the government ordered financial institutions to promote lending last November. The Central bank slashed interest rates several times since while the government abolished investment quotas. The effort was so successful, that lending by May 2009 exceeded that of whole 2008 and is expected to show a record number for June. Some fear that uncontrolled lending will result in a massive bad loan build-up, similar to the 1990s that cost over $64 billion to clean up before the four largest Chinese financial institutions went public in 2005. But Chinese domestic player don't share the scepticism and point to the economic buzz the stimulus package initiated. The World Bank raised 2009 GDP growth forecast from 6.2% to 7.5% for China just a week ago, close to the 8% the government is aiming to achieve.
Here is a list of the latest Chinese economic data ranging from retail sales through fixed asset investment to inflation. So far they all point to a strong economic recovery.
- According to the China National Bureau of Statistics (CNBS), industrial output growth increased to 8.9% in May compared to a year ago. (year-over-year or YoY)
- According to the Central Bank of China, new lending doubled in May to RMB664.5 billion ($97 bln) from RMB318 billion YoY
- Retail sales rose more than expected to 15.2% in May, according to a study released on the CNBS website. Furniture sales rose 33%, jewelry rose 28.7% YoY
- Auto production rose 29% in May YoY but was not enough to meet demand resulting in waiting lines for popular models
- Passenger car sales jumped 47% in May to 829,100 unites according to the China Association of Automobile Manufacturers. The unexpected jump is sales is attributed to subsidies in rural areas, decreased retails taxes, and other incentives. As a result, China overtook the U.S. as the largest car market in the world. Based on the latest statistics vehicle sales in China climbed to 4.96 million units, an increase of 14 percent, while vehicle sales in the U.S. contracted by 37% to 3.95 million in the first five months of the year. China became the largest car manufacturer in the world as of 2008 a number that is combined with the largest market as well, is a very strong statement in itself.
- Urban fixed asset investment rose to a record Yuan 5.35 trillion ($782.2 bil), an increase of over 31% for the first five months. A significant part of the stimulus package unveiled in last November was targeting affordable housing projects, schools, health car facilities besides roads, airports and other infrastructure.
- Property investment accelerated to 6.8% for the first five month vs. 4.9% till April.
- Despite strong economic activity, inflation eased by 1.4% in May 2009 YoY.
- Since Beijing unveilied its own stimulus program in November 2008, infrastructure activity picked up significantly. In numbers, China paved 12,500 miles rural road, built 340 miles of highway, and built 1.1 million square feet of airport buildings.