Tweet
China’s Investment Surges 26.5% as Exports Plunge (Update2)
Share | Email | Print | A A A
March 11 (Bloomberg) -- China’s investment spending surged as the nation poured money into roads, railways and power grids to counter a plunge in exports, which a separate report showed fell by a record in February.
Urban fixed-asset investment climbed a more-than-estimated 26.5 percent in January and February combined to 1.03 trillion yuan ($150 billion) from a year earlier, the statistics bureau said today in Beijing. Exports tumbled 25.7 percent.
Premier Wen Jiabao’s 4 trillion yuan package of tax cuts and infrastructure spending may help him to achieve a target of 8 percent economic growth this year even as world trade collapses. Signs of a Chinese recovery, including a surge in lending and gains in power consumption, have powered a 17 percent gain in the Shanghai Composite Index in 2009.
“China’s economic growth may rebound strongly in this quarter and the next because of the investment expansion prompted by the stimulus package,” said Xing Ziqiang, a Beijing-based economist at China International Capital Corp. “However, slumping exports may drag down investment by manufacturers, so that growth slows again in the second half.”
The gain in spending beat the 21.5 percent median estimate of 11 economists in a Bloomberg News survey.
The Shanghai index fell 1.1 percent as of 2:46 p.m. local time, paring the biggest gain this year among 91 benchmark indexes tracked by Bloomberg. The yuan traded at 6.8409 against the dollar from 6.8392 before the data was released.
Railway Spending Triples
Surging spending outweighs a slump in trade because fixed- asset investment accounts for 40 percent of China’s economic growth, versus 7 percent for net exports, said Sun Mingchun, a Hong Kong-based economist at Nomura Holdings Inc.
Railway investment tripled from a year earlier, agricultural spending doubled, and coal-mining expenditure jumped 59.6 percent, the statistics bureau said. The number of new projects climbed 28 percent to 18,533.
As the world’s second-largest oil consumer, China has approved and started at least $35 billion of energy projects since the stimulus plan was announced in November, according to data compiled by Bloomberg. The nation last month began building the eastern section of its second west-east gas pipeline, valued at 93 billion yuan.
Quicker Environmental Reviews
The environment ministry today said it cut its review time for new building proposals to two days from five. The regulator approved 246 projects with a total investment of 970 billion yuan in the first two months.
Construction-equipment sales in China may rise 20 percent in the second half as orders recover because of the spending, according to Lonking Holdings Ltd., the nation’s biggest maker of four-wheeled earthmovers.
The trade surplus narrowed to $4.8 billion, about an eighth of the amount in the previous month, the customs bureau said in a statement today. Imports fell 24.1 percent from a year earlier.
None of 16 economists in a Bloomberg News survey predicted such a large decline in exports, the biggest since Bloomberg data began in 1995. The median estimates were for a 1 percent fall in overseas shipments, a 22.5 percent drop in imports and a $28.3 billion surplus.
“There’s no hope for export demand to recover any time soon,” said Wang Qian, a Hong Kong-based economist at JPMorgan Chase & Co. “How fast imports recover depends on how soon the government’s stimulus package kicks in and creates real demand in major industries.”
Yuan Versus Dollar
After hitting a record $40 billion in November, China’s trade surpluses may stay below $20 billion for the next six months because of weaker demand, according to CICC’s Xing.
China has responded to the collapse in world trade by halting the yuan’s three-year advance against the dollar in July last year and reducing export taxes on products from toys to textiles.
A devaluation “cannot be ruled out if the outlook for the export sector worsens,” said Ben Simpfendorfer, an economist at Royal Bank of Scotland in Hong Kong.
The government plans to gradually cut all export taxes to zero to support overseas shipments, Commerce Minister Chen Deming said this week. More than 30 percent of the goods produced in Chinese factories are sold overseas, he said, in an interview published in Study Times, a Communist Party newspaper.
“Local manufacturers will continue to feel the squeeze brought on by a contraction in global consumption, and pressures on the government to quickly roll out the fiscal stimulus projects will intensify,” said Sherman Chan, a Sydney-based economist at Moody’s Economy.com.
Plunging exports and imports forced 20,000 small- and medium- sized companies in China’s Guangdong province to close since October, shedding 2 million jobs, the Nanfang Daily newspaper reported last month.
Those feeling the squeeze include suppliers to companies such as Mattel Inc., the world’s biggest toymaker, and U.S. department- store chain J.C. Penney Co. U.S. consumer confidence has tumbled as a recession deepens in the world’s biggest economy.
For Related News and Information: Most-read stories on China: MNI CHINA 1W Most-read China economy stories: TNI CHECO MOSTREAD BN For top economic news: TOP ECO For top environmental news: GREEN
Last Updated: March 11, 2009 06:25 EDT
So China shall at least stop mosto buying of treasuries, just when the US needs to raise more financing abroad Chinese source seems to be shrinking fast. More TBT buying ahead?
Share | Email | Print | A A A
March 11 (Bloomberg) -- China’s investment spending surged as the nation poured money into roads, railways and power grids to counter a plunge in exports, which a separate report showed fell by a record in February.
Urban fixed-asset investment climbed a more-than-estimated 26.5 percent in January and February combined to 1.03 trillion yuan ($150 billion) from a year earlier, the statistics bureau said today in Beijing. Exports tumbled 25.7 percent.
Premier Wen Jiabao’s 4 trillion yuan package of tax cuts and infrastructure spending may help him to achieve a target of 8 percent economic growth this year even as world trade collapses. Signs of a Chinese recovery, including a surge in lending and gains in power consumption, have powered a 17 percent gain in the Shanghai Composite Index in 2009.
“China’s economic growth may rebound strongly in this quarter and the next because of the investment expansion prompted by the stimulus package,” said Xing Ziqiang, a Beijing-based economist at China International Capital Corp. “However, slumping exports may drag down investment by manufacturers, so that growth slows again in the second half.”
The gain in spending beat the 21.5 percent median estimate of 11 economists in a Bloomberg News survey.
The Shanghai index fell 1.1 percent as of 2:46 p.m. local time, paring the biggest gain this year among 91 benchmark indexes tracked by Bloomberg. The yuan traded at 6.8409 against the dollar from 6.8392 before the data was released.
Railway Spending Triples
Surging spending outweighs a slump in trade because fixed- asset investment accounts for 40 percent of China’s economic growth, versus 7 percent for net exports, said Sun Mingchun, a Hong Kong-based economist at Nomura Holdings Inc.
Railway investment tripled from a year earlier, agricultural spending doubled, and coal-mining expenditure jumped 59.6 percent, the statistics bureau said. The number of new projects climbed 28 percent to 18,533.
As the world’s second-largest oil consumer, China has approved and started at least $35 billion of energy projects since the stimulus plan was announced in November, according to data compiled by Bloomberg. The nation last month began building the eastern section of its second west-east gas pipeline, valued at 93 billion yuan.
Quicker Environmental Reviews
The environment ministry today said it cut its review time for new building proposals to two days from five. The regulator approved 246 projects with a total investment of 970 billion yuan in the first two months.
Construction-equipment sales in China may rise 20 percent in the second half as orders recover because of the spending, according to Lonking Holdings Ltd., the nation’s biggest maker of four-wheeled earthmovers.
The trade surplus narrowed to $4.8 billion, about an eighth of the amount in the previous month, the customs bureau said in a statement today. Imports fell 24.1 percent from a year earlier.
None of 16 economists in a Bloomberg News survey predicted such a large decline in exports, the biggest since Bloomberg data began in 1995. The median estimates were for a 1 percent fall in overseas shipments, a 22.5 percent drop in imports and a $28.3 billion surplus.
“There’s no hope for export demand to recover any time soon,” said Wang Qian, a Hong Kong-based economist at JPMorgan Chase & Co. “How fast imports recover depends on how soon the government’s stimulus package kicks in and creates real demand in major industries.”
Yuan Versus Dollar
After hitting a record $40 billion in November, China’s trade surpluses may stay below $20 billion for the next six months because of weaker demand, according to CICC’s Xing.
China has responded to the collapse in world trade by halting the yuan’s three-year advance against the dollar in July last year and reducing export taxes on products from toys to textiles.
A devaluation “cannot be ruled out if the outlook for the export sector worsens,” said Ben Simpfendorfer, an economist at Royal Bank of Scotland in Hong Kong.
The government plans to gradually cut all export taxes to zero to support overseas shipments, Commerce Minister Chen Deming said this week. More than 30 percent of the goods produced in Chinese factories are sold overseas, he said, in an interview published in Study Times, a Communist Party newspaper.
“Local manufacturers will continue to feel the squeeze brought on by a contraction in global consumption, and pressures on the government to quickly roll out the fiscal stimulus projects will intensify,” said Sherman Chan, a Sydney-based economist at Moody’s Economy.com.
Plunging exports and imports forced 20,000 small- and medium- sized companies in China’s Guangdong province to close since October, shedding 2 million jobs, the Nanfang Daily newspaper reported last month.
Those feeling the squeeze include suppliers to companies such as Mattel Inc., the world’s biggest toymaker, and U.S. department- store chain J.C. Penney Co. U.S. consumer confidence has tumbled as a recession deepens in the world’s biggest economy.
For Related News and Information: Most-read stories on China: MNI CHINA 1W
Last Updated: March 11, 2009 06:25 EDT
So China shall at least stop mosto buying of treasuries, just when the US needs to raise more financing abroad Chinese source seems to be shrinking fast. More TBT buying ahead?
Comment