China's economic recovery picks up pace, but for how long? (+video)
While the global recession took a toll, China's economy is now in a sweet spot that may hold through the first half of 2013, say some analysts. But worrisome longer-term trends are surfacing.
New figures suggest that China’s economic recovery is speeding up, with industrial production and retail sales rising faster than expected in November.
The official statistics, released Sunday, signal that the world’s second-largest economy has avoided a hard landing for the foreseeable future, local and foreign analysts agree. Still, China’s long-term economic growth is not expected to regain the breakneck speeds of an earlier era.
A 10.1 percent year-on-year jump in industrial production “is a clear signal that the economy has changed direction” after seven straight quarters of shrinking GDP growth, says Andrew Batson, an economic analyst at the Dragonomics consultancy in Beijing.
The weekend’s good news, however, was dented somewhat by weak trade figures for November, released on Monday; exports grew by only 2.9 percent over 2011 levels, and imports were flat.
This was hardly surprising, however, in view of the fact that two of China’s largest trade partners, the European Union and Japan, are in recession; shrinking trade with those two markets offset a modest increase in trade with the US, where economic recovery remains hesitant.
“The trade figures reflect the serious impact of the global recession on the Chinese economy,” says Xiang Songzuo, senior economist at Agricultural Bank.
With the economy showing signs of bottoming out, analysts are predicting GDP growth rates next year of around 8 percent, up from this year’s projected 7.5 percent rate – the weakest performance since 1999.
“China’s economy is now in a sweet spot and can stay in the sweet spot through the first half of 2013,” wrote Lu Ting, the Bank of America’s China economist, in a research note Sunday.