FEARS OF a hard landing in China are looking increasingly overdone, indicators in the past few days show, and investor fears of sudden slowdown in the world’s second largest economy are easing.
Data at this time of year are always skewed by the two-week holiday for Chinese new year, but the trend remained upbeat.
February inflation dropped more than expected to give a 3.2 per cent year-on-year rise, its slowest pace in 20 months, according to the National Bureau of Statistics, and compared to 4.5 per cent the previous month.
At China’s annual parliament this week, premier Wen Jiabao set an inflation target of about 4 per cent for 2012, unchanged from last year.
Retail sales rose 14.7 per cent, lower than an expected year-on-year rise of 17.5 per cent. Factory production rose 11.4 per cent in January and February combined, and local currency loans were 710.7 billion yuan (€86 billion) in February.
The data seem to show there is room for the government to deliver more growth-friendly policy support, such as easing monetary policy in China, while still keeping on with its efforts to reform the economy.
Wang Tao, China analyst at UBS, said the data suggested that economic activity was not as weak as feared and has clear upside, and therefore she did not expect any further monetary policy easing even if the drop in inflation provides more room for it.
“Setting a 7.5 per cent GDP growth target is a signal that the central government is not going to undertake major stimulus or liquidity easing, but the current modest easing of macro policy remains,” she said.
