April 16, 2009
1st Quarter China GDP growth 6.1% (compared with 10.6% 1st quarter 2008)
There are indications that the $585 billion stimulus package may be beginning to filter through the Chinese economy:
· Industrial output – 5.1% expansion in Q1 2009 (8.3% in March alone)
· Fixed asset investment, such as new factories and equipment was up 28.6% in Mar
· Industrial output – 5.1% expansion in Q1 2009 (8.3% in March alone)
· Fixed asset investment, such as new factories and equipment was up 28.6% in March
· Property development grew by 4.1% in 1st quarter 2009
· Retail Sales by 4.1% in Q1 2009
In terms of the manufacturing sector:
· Producer Price Index (‘PPI’) fell 4.6% in the first quarter
· Purchasing Manager’s Index (‘PMI’ as provided by CLSA) stabilised at 44.8 (from 45.1 in
February)
The latter still indicates a decrease in output, which is clearly impacted by the drop off in global demand and correction of global inventories. Business conditions continue to be particularly tough for manufacturers and ET2C recommends that it is still therefore necessary to manage the risk of buying from China by appropriate levels of due diligence.
It was notable that US Treasury Secretary, Timothy Geithner, put out a statement on 16 April stating that China is not a ‘currency manipulator’, which eases pressure on China to allow it’s currency to rise, which would impact exports further; a complete u-turn from his comments at his senate hearing.
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