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China back on track economically

By Catholic Online (NEWS CONSORTIUM)
January 18th, 2013
Catholic Online (www.catholic.org)

The economy of China was in a slump for more than two years, affecting the world economy. However - there are signs that the Asian giant is now back on track. Quarterly growth has topped all expectations. A rebound in industrial output, retail sales and the housing market has turned the tide.

LOS ANGELES, CA (Catholic Online) - Gross domestic product rose 7.9 percent in the fourth quarter from a year earlier, the National Bureau of Statistics said in Beijing. That compared with the 7.8 percent median estimate in a Bloomberg News survey and 7.4 percent in the previous period. Industrial output in December has risen to a more-than- expected 10.3 percent and fixed-asset investment for the year gained 20.6 percent.

These are all hopeful signs that the global economy is improving. U.S. data yesterday showed housing starts at a four-year high, European bond yields receded from crisis levels and Japan announced a $116 billion stimulus.

In order to sustain growth, China's incoming premier, Li Keqiang needs to address the dwindling effects of government support.

"China's recovery is in quite good shape," Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong, said in a telephone interview. "Domestic pro-growth policies are likely to wane in mid-2013," yet demand from abroad may pick up in the second half, he said.

The Shanghai Composite Index (SHCOMP), the nation's benchmark gauge, has advanced 18 percent from an almost four-year low on Dec. 3, including a 1.4 percent rise today.

In addition, the yuan has appreciated 0.23 percent against the dollar this year as of Thursday, the best start since 2009. The yuan touched 6.2124 per dollar on Jan. 14, the strongest level since the government unified the official and market exchange rates at the end of 1993. It was little changed today at 6.2153 as of 3:04 p.m. in Shanghai.

In light of this activity, Zhu said he's considering raising his forecast for 2013 GDP growth to 8.2 percent from 8 percent.

A separate report today showed China's new home prices rose in December in 54 of 70 cities the government tracks, the most in 20 months.

The Chinese economic news is not all good -- the economy expanded 7.8 percent for the full year, the least in 13 years, according to statistics bureau data, compared with the 7.7 percent median estimate in a Bloomberg survey of 32 economists. Growth may pick up to 8.1 percent this year, according to analysts polled by Bloomberg in December.

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