Chinese Monthly Update – August 2012
Partial economic indicators are starting to stabilise somewhat, but the overall trend in the data was disappointing for the month […]
- Partial economic indicators are starting to stabilise somewhat, but the overall trend in the data was disappointing for the month of July given our expectations for a slight improvement in economic growth over H2 2012.
- Industrial production softened further along with nominal retail sales, while export growth and bank loans were both well below expectations. In contrast, real retail sales growth was robust, while investment has remained stable despite further slowing in real estate investment.
- Despite some soft data, the PBoC hasn’t taken further steps to loosen policy settings and has continued to rely on open market operations to manage liquidity conditions. Concerns over future food price inflation and rising house prices may explain the central bank’s reluctance to respond.
- Nevertheless, we still haven’t ruled out a third cut to interest rates this quarter, along with two to three more cuts to the RRR this year to help improve liquidity and shore-up growth.
- We have kept our forecast for China’s GDP growth unchanged at 7¾ per cent in 2012, and are still looking for growth to bottom-out in either the June or September quarters as recent policy stimulus gains more traction.
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About the Author
James joined NAB early in 2011 from the Reserve Bank of Australia where he worked for four years. He was involved in analysis of overseas economies and commodities, as well as business investment and residential property within Australia.
Before this, James taught economics at the University of Western Sydney, and was employed as an economic forecaster with Integral Energy.
He graduated from the University of Western Sydney (with first class honours in Economics) and was a recipient of the Honours Economic Society Award (HESA) in 2006. James also holds a Bachelors degree in Law.
At NAB, James is responsible for monitoring and forecasting the emerging Asian economies with a particular emphasis on China, and is also a member of the commodities team.
