China export, import and lending data all started 2013 stronger, while inflation was softer. But with the different timing of the Lunar New Year holiday this year (January in 2012, February in 2013), cautious interpretation is required. In general though, the data support the story of a recovery in growth in 2013. There is clear upside risk emerging to my 8.0% annual average GDP forecast for 2013, but I will leave it where it is until the New Year holiday data washes through.
Exports surged to annual growth of 25% in
January, up from 14% in December. This
data can be volatile so we’re not reading too much into this number. Our 3-month rolling annual percent change
current stands at a more modest 13%, which is closer to where we think 2013
exports will end up. That still seems
strong compared to where U.S. and Europe growth is likely to be this year, but
the biggest growth in China exports to other Asian economies.
Imports were up an even more robust 29%,
reflecting restocking prior to the New Year holiday and the fact that in China,
exports have a high import component. In
that regard, strong imports support the validity of the export data.
Lending was also very strong in January
with total new lending more than double that of December, although base effects
kept the growth rate subdued. Social
financing was also strong reflecting stronger demand for credit in the economy.
Consumer inflation dropped back to 2.0% in
January, down from 2.5% in December. However,
the lower inflation rate in January primarily reflects the higher base in
January 2012 when prices increased sharply for the New Year holiday. We expect a spike higher in prices to come
through in February, and for inflation to trend higher in 2013 to around
With higher inflation ahead, the property
market recovering and stronger money supply growth it was no surprise the
People’s Bank of China last week flagged their intention to contain inflation
risks. To us that means no further
monetary easing this year, although we wouldn’t expect to see any tightening in
conditions this year either unless growth is significantly ahead of