Official statistics of an economy are crucial for any country. In the case of China are very important to project the performance of the global economy, as the Asian giant is the second largest economy with a GDP (current prices USD) $ 8.227 billion in 2012 according World Bank’s data.
- Data on Chinese GDP growth in the second quarter of 2013 (until June)
The announcement that China’s economy grew by 7.5 percent per year in the three months to June was a positive surprise. Many analysts were expecting a loosest unemployment because of the weak indicators series that preceded. However, it is the less robust growth since 1990, discounting some quarters during the height of the global financial crisis.
Digging bellow the overall figure, it is clear why 2013 is still a difficult year for China. Beijing is planning to leave his investment-driven model growth. However, in the three months to June, investment remains the main engine of economic growth. Its contribution to growth was twice as large as consumption’s. If local governments and state-owned companies to stop pouring money into new buildings and roads, growth could suddenly stop. However, for economic reforms to become a force that transforms the Chinese model to one oriented towards consumption require a GDP growing at close to current figures, around 6.5% to 7.5%. At the highest levels of the Chinese government, there is a strong consensus on this point.
In the first quarter of 2013 growth in the gross domestic product (GDP) of China slowed to 7.7%, against 7.9% in the fourth quarter of 2012, according to data from the National Bureau of Statistics (NBS).
The growth rate fell short of most market expectations, but was above the 7.5% target set by the government for the whole year.
- Industrial Production
The value-added industrial output measures the final value of industrial production, or the value of gross industrial output minus intermediate inputs such as raw materials and labor costs.
The added value industrial output of China grew 9.3 percent year on year in the first half of the year, the National Bureau of Statistics (NBS) informed. The figure was 0.2 percentage points lower than in the first quarter and eased more compared to annual growth of ten percent in 2012, according to NBS data. In June, added value industrial production increased 8.9 percent year on year, compared to 9.2 percent in May. Total industrial production rose 0.68 percent in June from the previous month, according to the same source.
Although inflation may remain benign in the coming months in the absence of an economic recovery, the central bank is concerned about the risks of long-term inflation that could complicate economic policies, especially as property prices continue to rise. These data “reduce the likelihood of a cut in interest rates this year and that is not a good political background to have,” said Kevin Lai, an economist at Daiwa in Hong Kong.
Summarizing, annual consumer inflation in China accelerated more than expected in June, but deflation at factory gates persists for the sixteenth straight month, underscoring the political dilemma faced by the Bank of China, concerned about risks of long-term prices even if economic growth slows. Analysts believe that the central bank will maintain its neutral policy in the short term to balance the need of having the second largest economy at a stable level, while keeping inflation and possible real estate bubbles at bay.