Chinese GDP Growth May Slow Down in 2013


After gaining a positive momentum at the end of 2012, Chinese GDP growth slowed to 7.7 percent yoy and 1.6 percent qoq in the first quarter of 2013. More importantly, recent data updates are showing that the expansion in the months ahead may remain weaker than expected.

Although in April industrial output increased 9.3 percent yoy, up from an 8.9 percent expansion in March, it was still lower than the 9.9 percent growth in January to February period. Exports data also do not show anything promising. In April, shipments were up 14.7 percent yoy supported by growth in exports to Hong Kong, up 57 percent, and to special customs zones in China for export later. Yet, since Hong Kong’s data has not been showing large increases in imports from China in that period, the exporters might have overinvoicing the shipments. In addition, consumer spending is rising, but not fast enough to offset weakness in other sectors. In April, retail sales growth slightly accelerated but was still below the government's target of 14.5 percent for 2013. To make things even worst, there are clear signs that the Chinese economic expansion may need some adjustment sooner or later. In fact, high growth rates are still possible because of huge increases in lending by state-controlled banks and a surge in off-balance sheet lending. Total government and private sector credit has already reached 200 percent of GDP, up from 120 percent in 2007.


In the first quarter, the GDP expanded 7.7 percent yoy, down from 7.9 percent reported a quarter earlier. In April, industrial production grew 9.3 percent yoy, only slightly up from 8.9 percent reported in March.
 
In April, inflation quickened to 2.4 percent from 2.1 percent reported in March. The current monetary policy is already loose and there is no need to for interest rate cuts.
     

In April, China reported a trade surplus of $18 billion. Exports grew 15 percent led by a 57 percent jump in shipments to Hong Kong.
 
In April, retail sales increased 12.8 percent yoy while imports surged 17 percent yoy.

 


Anna Fedec, anna@tradingeconomics.com
5/19/2013 1:34:01 PM