A review of China economic measures and indices 2010 and my thoughts

1. Economic Forecasts & Opinions
Dian L. Chu

2. Source: http://www.chinadaily.com.cn/

3.  China's consumer price index (CPI) rose 4.6% in December, 2010 year-on-
year.
 The CPI was up 3.3% in 2010 from the previous year.
 The prices of food, which accounts for a third of the basket of goods in
China's CPI calculation, surged 7.2% year-on-year in 2010.
Source: http://www.chinadaily.com.cn/

4.  China's producer price index (PPI) rose 5.5% in 2010.
 The December PPI was up 5.9% year on year.
Source: http://www.chinadaily.com.cn/

5.  Home prices in 70 major Chinese cities rose 6.4% year-on-year in
December, 2010.
 New home prices and existing home prices climbed 7.6% and 5%,
respectively year-on-year in December.
 December is the eighth consecutive month of slowing growth from a
peak of 12.8% in April, 2010.
Source: http://www.chinadaily.com.cn/

6.  China's urban fixed-asset investment rose 23.8%
year-on-year in 2010, vs. 30.1% year-on-year in
2009.
Source: http://www.chinadaily.com.cn/

7.  China's retail sales rose 18.4% year-on-year to 15.46 trillion yuan
($2.34 trillion) in 2010.
 The real inflation-adjusted growth rate of retail sales was 14.8% in
2010.
Source: http://www.chinadaily.com.cn/

8.  China's factory inflation cooled in December as the official Chinese
purchasing managers' index (PMI) edged down to 53.9 in December
from November's 55.2.
 An index reading above 50 represents growth/expansion.
 The number indicated China manufacturing sector is still expanding
despite the slight pull-back in activity.
Source: http://www.chinadaily.com.cn/

9.  China's foreign trade in 2010 jumped 34.7% from a year earlier
to $2.97 trillion, while trade surplus fell 6.4% to $183.1 billion
from the 2009 level.
 Exports grew 31.3% year-on-year last year to $1.58 trillion while
imports surged 38.7% to $1.39 trillion.
 China trails only the US as a net importer of crude oil.
Source: http://www.chinadaily.com.cn/

10.  New yuan-denominated lending in China reached 7.95 trillion
yuan ($1.2 trillion) in 2010.
 The figure was 1.65 trillion yuan less than the 2009 level.
 New yuan-denominated loans in December last year stood at
480.7 billion yuan.
Source: http://www.chinadaily.com.cn/

11.  Foreign direct investment (FDI) into China hit a record $105.74
billion in 2010, up 17.4% year-on-year.
 In December alone, China attracted $14.03 billion of FDI, up 15.6%
year-on-year - the 17th consecutive month of FDI growth.
 The rapid FDI growth could be attributed to robust development in
the service sector and the country's central and western regions.
Source: http://www.chinadaily.com.cn/

12.  China’s fiscal revenue grew 21.3% year on year to 8.31 trillion yuan ($1.26
trillion) in 2010.
 Of the total, the central fiscal revenue topped 4.25 trillion yuan, up 18.3%
from the previous year, while local governments collected 4.06 trillion yuan,
up 24.6%.
 The fiscal revenue for last December surged 23.7% year on year to reach 634
billion yuan.
Source: http://www.chinadaily.com.cn/

13. Source: http://www.chinadaily.com.cn/

14.  “Tightening excess money supply and increasing competitive
investment could help lower commodity prices.” ~ Guo
Tianyong, The Central University of Finance and Economics.
 “Unexpected increase in interest rate should help contain the
soaring prices and real estate bubble in the new year.” ~ Yi
Xianrong, The Chinese Academy of Social Sciences
 “Unless the central bank changes its current policy approach,
inflationary pressure is likely to rise further, at least in the
first half of this year.” ~ Huang Yiping, professor at Peking
University.
Source: http://www.chinadaily.com.cn/

15.  There are many things China has to do to get the
inflation problem under control, or risk civil and
economic chaos.
 Chinese government will likely be vigilant and
implement a combination of more aggressive fiscal
and monetary policies in 2011 and 2012.
 Expect shock waves to hit commodities and other
global financial markets, albeit temporary, as China
tightens more.
 However, I believe China’s long term growth
prospect is still intact, but the next two years
would be a pivotal and transformational period to a
more sustainable growth for the Middle Kingdom.

16.  The best way to invest in China, and hedge inflation is in
Commodities, instead of focusing on individual regions.
 Buy on any pullbacks via option, futures, ETFs, stocks of
resource related companies such as producers, and oilfield
services companies.
Graphic Source: Financial Times

17. Economic Forecasts & Opinions
Dian L. Chu
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