Friday 24 November 2017

Global shares climb as China avoids downturn

China's economy is slowing but still doing better than expected
China's economy is slowing but still doing better than expected

Marc Jones and Richard Hubbard

CHINA reported that its economy grew at a slightly faster-than-expected 7.9pc in the fourth quarter of 2012, a clear sign it has avoided a sharp economic slowdown.

Global shares climbed to a 20-month high yesterday after fresh data revealed growing economic momentum. Despite the fourth quarter spurt, 2012 saw China post the weakest annual growth rate in 13 years.

"It seems since about September or October, China has started rebounding," said Louise Cooper, financial analyst at CooperCity. "The strength of the fourth quarter of 2012 has definitely continued into 2013," she said.

The positive news came on top of strong US labour and housing market reports the previous day, providing fresh impetus to a broad rally in equities, precious metals and commodities since the start of the year.

China's year-end spurt was supported by infrastructure spending and a jump in trade signalled the foundation for the stable growth path Beijing says is vital for economic reform.

Evidence of a burgeoning recovery in exports, stronger-than-expected industrial output and retail sales, together with robust fixed-asset investment, all indicated that Beijing's pro-growth policy mix has gained sufficient traction to underpin a revival without yet igniting inflationary risks.

The performance was at the upper end of the 7-8pc rate economists reckon is needed to deliver on reforms essential to China's long-term development after three decades of red-hot, double-digit growth.

"It's kind of like a golden spot – stronger growth, but not strong enough to trigger a lot more inflationary concern. That's perfect for equity markets," said Dariusz Kowalczyk, Asia ex-Japan senior economist and strategist at Credit Agricole in Hong Kong.

"What everybody wants is growth that's strong enough to give us peace of mind, that revenues will increase, and there is no hard-landing risk, but not excessive, not strong enough to trigger inflation.

"And this is what I think we are getting. I'm bullish on China still." (Reuters)

Irish Independent

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