China Retail Sales Rise 19%; Shanghai, HK Indexes Down

Chandrasekhar Atreya
22 Oct, 2010
New York City

Stocks in China dropped led by financials offsetting gains in the automotive and industrials. Retail sales grew 19% while pace of industrial growth, infrastructure spending and profits at state-owned enterprises slowed in September.

[R]5:00 PM Hong Kong, China – Stocks in China dropped led by financials offsetting gains in the automotive and industrials. Retail sales grew 19% while pace of industrial growth, infrastructure spending and profits at state-owned enterprises slowed in September.[/R]

The benchmark index in Shanghai closed slightly lower as losses in the financial sector more than offset gains in auto sector and advanced industrial material producers. The CSI 300 Index in China closed little changed. Stocks in Hong Kong fell and for the week the index dropped 1%.

The CSI 300 Index in China gained 0.12% or 3.97 points to close at 3,378.66 and fell 50.97 or 1.53% in the week. Hang Seng Index in Hong Kong fell 0.56% or 131.94 to close at 23,517.54 for a weekly loss of 240.09 or 1.01%.

Retail sales in China grew 18.8% in September from a year earlier, after gaining 18.4% in August, the National Bureau of Statistics said Thursday. The monthly figures continue to remain above a five-year average of 16.6% growth.

By categories, gold and silver jewelry led the sales gains with 54.9% growth followed by increases in furniture, entertainment, office equipment and autos. The figures also show the shift in buying habits away from daily necessities to more up-market products as China’s middle class widens.

China’s industrial output and infrastructure spending grew at a slower than the expected pace in September, probably reflecting the efforts of the government to curtail production of big industrial polluters and shift manufacturing to cleaner and energy-efficient industries.

Industrial production grew 13.3% in September from a year earlier, compared with a 13.9% growth in August. Urban investment in public works grew at 23.2% compared to 23.9% growth in August, according to data released by National Bureau of Statistics on Thursday.

Urban unemployment rate in China was 4.1% at the end of September, dropping from 4.2% at the end of second quarter, a Ministry of Human Resources and Social Security official said in Beijing Friday.

There were 9.05 million urban residents registered as unemployed, where as China created 9.31 million new jobs in the first nine months of the year, said Yin Chengji, spokesman of the ministry at a press conference in Beijing.

The country faces risks of excess liquidity, inflation, asset price bubbles and bad assets, People’s Bank of China Governor Zhou Xiaochuan warned while speaking at an IMF meeting in Shanghai on Monday.

He said that banks in China are still on track to expand liquidity while cross-border capital inflows contain potential risks. He also said that the country’s economy is expanding unevenly signaling rising systemic risk in the financial system.

Profits at state-owned enterprises in China administered by the federal government grew at a slower pace in September, reflecting a moderation in the nation’s economic growth.

Their net earnings in September grew at 6.9% from a month earlier to 111.9 billion yuan, according to the State-owned Assets Supervision and Administration Commission. Profits at these companies rose 11.49% in August.