(eToro Blog) China reported fourth quarter GDP rose 8.9% from a year earlier. The data beat most analyst expectations of a print of 8.6%. While the data was better than analyst expectations, the results fell short of the GDP growth experienced in the previous quarter. There was a 9.5% growth in the third quarter from a year earlier. The biggest reason cited for the decline in GDP growth was attributed to decline in real estate investment growth. Real estate prices in China, which were bid up by speculators, have cooled and providing for a much needed correction in prices. The correction in real estate prices along with tight credit and a slowdown in Europe are putting the brakes on growth in China.
In addition to the GDP data, there were a few other economic reports from China. Chinese December retail sales grew 18.1% from a year earlier. Industrial output in December grew 12.8%. Investments in fixed assets also grew 18.3% in December. Industrial production grew 12.8%. Overall while the growth was positive, it is nonetheless showing signs of a slowdown.
Economists are expecting the Chinese government to ease monetary policy as the world’s second’s largest economy heads to a soft landing. Analysts expect exports to slow down even further in the first quarter of 2012 as the European crisis dampens growth globally. The People’s Bank of China has already cut reserve ratio requirements at banks in order to encourage more lending. Chinese industrialists have been vocal about the lack of access to credit in recent months.
Asian stock markets performed better as markets were able to move past the S&P European downgrades in the second day of trading after the announcement. The Japanese Nikkei is up 88 points, the Hang Seng is up 430 points, the Shanghai index is up 86 points and the Australian S&P ASX is up 69 points. A slowdown in China directly impacts commodity exporting nations such as Australia which rely on exports to fuel their own growth. Traders on OpenBook are primarily short on the AUDUSD with average limits at 1.0250 and stops at 1.0450.
Copyright 2012 eToro Blog
