China growth defies recession

From FAIRPLAY, Jan 21 2010

CHINA today posted a stunning 10.7% GDP growth figure for the fourth quarter of 2009, as well as a more than healthy 8.7% overall increase for the recession-racked year.

“China’s economy gained momentum in December,” said the National Bureau of Statistics, which pointed out that GDP growth hit the target for 2009 despite the global recession.

GDP of the world’s third-largest economy tumbled to 6.1% in the first quarter, improved to 7.9% in the second and rose to 8.9% in the third quarter.

Industrial output rose 11% year on year in 2009, though inflation rose 1.9% in December, prompting Beijing to curb lending and rein in a loose monetary policy, the official People’s Daily Online reported.

China’s growth is good news for shipping. Only yesterday Joseph Tan, chief economist for Asia at Credit Suisse, said in Singapore that the Baltic Dry Index will average 3,500 for H1 2010 on the back of firm iron ore trade and contract renegotiations involving China and Australia.

Tan, who was addressing the Singapore Shipping Association, was also close to the mark when he estimated that China’s GDP growth for 2009 would be 8.5%. Credit Suisse has forecast China GDP to grow by 9.5% during 2010.

There was a slight discrepancy in the centrally controlled Chinese media: the China Daily quoted the statistics bureau as attributing the 10.7% growth for the entire fourth quarter, while the People’s Daily just said double-digit growth was achieved in December 2009.

China’s economic rally was made possible through part-utilisation of a 4 trillion yuan fiscal stimulus package (11% of GDP) to prop up infrastructure spending and urban and rural incomes.



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