Business / Indepth

August's data signal stronger growth: Analysts

By Chen Jia (China Daily) Updated: 2013-09-10 23:50

The overall rebound was in line with robust demand from Asia, especially from the Association of Southeast Asian Nations, and the faster recovery in the United States and European Union.

Louis Kuijs, chief economist in China at the Royal Bank of Scotland Group Plc, said that in addition to the export improvement, domestic demand has become the key to driving up overall growth. He pointed to such areas as robust property construction and infrastructure projects, including railways.

Stronger domestic demand has offset the impact of a firmer monetary stance, Kuijs said. RBS said the stronger figures were signs of a cyclical improvement, which could yield 8.2 percent economic growth in 2014. This year's GDP growth rate is expected to be 7.5 percent.

Qu Hongbin, chief economist in China with HSBC Holdings Plc, said that economic growth bottomed out in the second quarter, when it slowed to 7.5 percent from 7.7 percent in the first three months.

"Growth in the third quarter is likely to be even faster, as investment in both the manufacturing industry and infrastructure are tending to accelerate," Qu said.

On Tuesday, the People's Bank of China reported faster-than-expected growth of new credit and money supply in August. New yuan-denominated loans were 711.3 billion yuan ($115 billion), compared with 703.9 billion yuan a year earlier.

Broad money supply rose 14.7 percent year-on-year, up from 14.5 percent in July, according to the central bank. "The government can keep monetary policy relatively accommodative to ward off any downside risks," said Qu.

Those risks include the currency and market impact of any United States move to taper off its quantitative easing policy.

A much better sign that China can stabilize economic growth in the coming months is that inflation remains tame. The consumer price index rose 2.6 percent year-on-year in August, down from 2.7 percent in July, according to the NBS.

Electricity consumption, which is considered a proxy for industrial production, is expected to pick up at a double-digit rate in August, as the provincial data that have been released all showed expansion.

Zhejiang, a coastal province with many export-oriented manufacturers, reported a 15.2 percent increase of electricity use in August, up from 11.8 percent in July.

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