Solid Economic Growth in China

Chandrasekhar Atreya
13 Sep, 2010
New York City

Larger than expected industrial production increase in China and sustained consumer demand in August lifted stock indexes in Hong Kong and Shanghai. Industrial production increased 13.9% and retail sales surged 18.4%. However, inflation perked up to 3.5%. Crude processing declines for the third month in a row in the month.

[R]5:00 PM Hong Kong, China – Larger than expected industrial production increase in China and sustained consumer demand in August lifted stock indexes in Hong Kong and Shanghai. Industrial production increased 13.9% and retail sales surged 18.4%. However, inflation perked up to 3.5%. Crude processing declines for the third month in a row in the month.[/R]

China reported a surge in August industrial production and inflation advanced at the fastest pace in 22 month. Retail sales surged in the month indicating healthy consumer demand.

The sustained industrial expansion lifted sentiment in trading and stocks in Shanghai and Hong Kong surged. Stocks in Hong Kong rallied more than 400 points sending the index towards its one-month high.

All but one stock in the 45 member gauge of Hong Kong gained.

The CSI 300 Index in China gained 1.01% or 29.77 to close at 2,962.32. The Hang Seng Index in Hong Kong added 1.89% or 400.96 to close at 21,685.35.

Industrial production in China surged 13.9% in August from a year earlier, the largest gain since May, the Statistics Bureau said Saturday in Beijing.

In the first eight months production expanded at 16.6% from a year ago, down 0.4% from the first seven months of the year with all 39 industries registering growth, the bureau said.

Consumer price index, the measure of inflation also advanced 3.5% in August from a year earlier, the sharpest increase in nearly two years, the National Bureau of Statistics said Saturday. The growth was 0.2% higher than in July, the NBS said.

Food prices, which account for about one-third of the weighting in calculating the CPI, climbed 7.5% from a year ago in August, according to NBS figures.

Fixed asset investment reached 14.1 trillion yuan in the first eight months of the year, an increase of 24.8% from a year ago, the NBS said Saturday. The growth rate was 0.1% less that for the first seven months of the year.

Retail sales of consumer goods in August reached 1.26 trillion yuan, up 18.4% from a year ago or increased 0.5% from July, the NBS said Saturday.

Retail sales in the first eight months of the year increased 18.2% compared to the period a year ago to 9.75 billion yen.

China’s fiscal revenue was 561.94 billion yuan in August, up 7.3% from a year ago, the Ministry of Finance said Friday. For the first eight months of the year the fiscal revenue rose 23.6% from a year ago to 5.68 trillion yuan, the ministry said.

Companies from Singapore are targeting sectors like food, education and medicine in China as the country’s continued economic growth will create demand among consumers for such services.

“We’re targeting sectors like food, education, clothing and medical services industries, as China’s consumption rises,” said Liane Ong, Regional Director of East China Region of International Enterprise, Singapore, on Sunday in Shanghai.

More than 1,400 people from business, government and other fields worldwide will meet in China to discuss ways to achieve sustainable growth amid global economic recovery at the upcoming fourth summer Davos Forum.

The meeting sponsored by Geneva-based World Economic Forum, is set to be held in Tianjin from today till Wednesday with the main theme “Driving Growth through Sustainability.”

Oil processing in China fell in August when compared to July as refineries cut production because of scheduled maintenance at refineries.

Refineries in China processed 34.73 million tons of crude in August or about 8.21 million barrels a day, making it a third month of decline in a row, according to data from China Mainland Marketing Research Co that compiles these figures from the National Bureau of Statistics.