Photo: Thomas Fischler / Flickr
China will release a string of data tonight that could help strengthen the argument of an economic recovery.Chinese trade data for December already came in higher than expected, and we’ve previously explained how import data disappointed those arguing for a hard landing.
Tonight’s data dump includes GDP, fixed asset investment, retail sales, and industrial production that are all out at 9 p.m. ET.
Analysts polled by Bloomberg are looking for real GDP to rise 7.8 per cent year-over-year (YoY), and year-to-date (Ytd) GDP to rise 7.7 per cent. On a quarterly basis, it is expected to rise 2.2 per cent.
Bank of America’s Ting Lu, who has been named the third most accurate Chinese forecaster, expects GDP to come in at 7.8 per cent.
Many argue that Chinese GDP data isn’t entirely reliable and Chinese vice premiere a Wikileaks report quotes Li Keqiang saying the GDP number and most other economic indicators are “man-made” and “unreliable”.
Consensus is for industrial production to rise 10.2 per cent YoY, and for Ytd industrial production to rise 10 per cent. Ting expects industrial production to rise 10.3 per cent.
This chart shows the close correlation between industrial production and power consumption.
Photo: Bank of America
Fixed asset investment (FAI)
Analysts polled by Bloomberg are looking for ex-rural YTD FAI to rise 20.7 per cent YoY. Ting says year-to-date FAI should rise 20.5 per cent.
FAI accounts for over 50 per cent of GDP and is an all-important measure of government spending. Ting says it should decelerate from 20.7 per cent in November and that this indicator is noisy at the end of the year.
“Overall, we believe FAI growth is on an upturn entering 2013 (we estimate 22.7% growth in 2013), buoyed by accommodative policy stance, supportive credit condition, improved business confidence and more expensive raw material prices. The total planned investment in newly started projects, a leading indicator of FAI, accelerated to 49% yoy in Nov from 35% yoy in Oct, suggesting FAI growth could remain steady in the coming months.”
Retail sales are expected to rise 15.1 per cent YoY and Ytd retail sales are expected to rise 14.3 per cent YoY. Ting expect retail sales to rise 15.2 per cent YoY driven by confidence in the economic outlook. He also said better home sales should support sales of home appliances and construction materials.