China Loan Expansion Slows

A lot of economic announcements from China today. So, let’s start. China’s industrial production rose 16.1% in October from a year before following 13.9% rise in September.

The export decline slowed to 13.8% in October (year-on-year). If we adjust for holidays, it was down only 9.1% . The trade surplus rose to 23.99 billion USD – almost double in comparison to September.

Retail sales grew an annual 16.2% in October. Urban fixed-asset investment rose 33.1 % in the first 10 months of this year, easing from the month before reading of a 33.3%.

China’s consumer prices fell by 0.5% in October from a year earlier vs. -0.8% reading the month before. Producer prices fell 5.8 %. Urban property prices jumped 3.9 %in October.

Power generation was 17.1 % higher over the same month last year.

And with all those, I would say, magnificent figures Shanghai Composite closed marginally negative. Apparently the key is in monetary figures.

Chart 1. Shanghai Composite

Source: Bloomberg

Source: Bloomberg

Chinese banks extended 253 billion yuan (37 billion USD) of new local-currency loans vs. 516.7 billion yuan in September and a Bloomberg survey figure of 370 billion yuan. M2 rose 29.4% from a year earlier, right at the consensus.

The critical part of the report were medium- and long-term loans, which rose only 411 billion yuan, 32.5% lower than the 608 billion yuan/month rate for the first nine months of the year. New medium- and long-term loans extended to enterprises were 273 billion yuan, vs. 478 billion yuan/month for the first nine months.

To sum up China economy keeps the global economy above the water. The GDP growth was maintained at near 9% rates due to fiscal and monetary stimulus which, if we judge by the new loan figures is abating. If exports continue to grow, which could very well be the case (improved currency competitiveness from the USD/yuan peg; dollar decline), China could emerge from the crisis very well off with only some scars to the bank balance sheets and increased public debt (still in low figures).

, , , , , , ,

This entry was posted on Wednesday, November 11th, 2009 at 6:26 am and is filed under Markets. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

Comments are closed.


Get Adobe Flash player