China: GDP Slows to 8.1% Growth

April 13th, 2012
in econ_news

Econintersect: China’s economic growth in the first quarter fell short of the 8.3% annual rate which was the consensus forecast. The 8.1% annual rate of China-flaggrowth was down from 8.9% in the fourth quarter of 2011. Yet 8.1% is stronger than a few expected who have been suggesting that China could be headed for a more dramatic slowdown. The weakest areas of the economy came in the trade balance, which was just barely above zero, and in weak domestic consumption. After years of strong balance of trade contributions to GDP, China is now experiencing the impact of slow economic growth in the U.S. and increasing movement toward recession in Europe.

Follow up:

Some forward looking numbers in the data were stronger than expected. March factory output was up 11.9% year-over-year, above the 11.5% forecast. Also Fixed Asset Investment was slightly above the 20.8% growth forecast, coming in at 20.9% year-over-year for the full quarter. Another sign of strength was the increase of retail sales growth in March to 15.2% year-over-year, above the levels of the two previous months and beating the forecast of 15.0%.

Reuters reported the reactions of a large number of analysts. Here is what one of them had to say (Ting Lu, Economist at Bank of America/Merrill Lynch in Hong Kong):

"Markets could be slightly disappointed about the below-consensus 8.1 percent growth, but markets are forward looking anyway. With the strong new loans data and the rebound of production in March, most investors will accept March is the turning point, and we are now on the upturn of the cycle.

"We are comfortable with our 8.6 percent annual GDP growth forecast, and we expect year-on-year GDP growth to rebound to 8.5-8.6 percent in coming quarters. We don't think Beijing has an appetite for higher growth because that will raise prices of raw material imports and re-ignite inflation.

"(The) policy stance will remain pro-growth, but don't expect a big stimulus. The chance of a rate cut is extremely small in the near future. The chance of RRR cuts declines on the margin, but we still expect two 50 bps RRR cuts before year-end. Beijing just needs to deliver what it promises on policy (14 percent M2 growth, 8 trillion yuan of new loans, social housing and some infrastructure)."

Here is the complete government press release:

Sheng Laiyun
Spokesman
National Bureau of Statistics of China
13 April 2012

In the first quarter of 2012, faced with the complicated and volatile international environment and the new emerging challenges in domestic economic development, all departments of the State Council and local governments earnestly implemented the policies and measures set by the Central Economic Work Conference and Report on the Work of the Government, kept making progress while maintaining stability. As a result, national economy got stabilized and maintained steady and comparatively fast growth.

According to the preliminary estimation, the gross domestic product (GDP) of China in the first quarter of this year was 10,799.5 billion yuan, a year-on-year increase of 8.1 percent. The value added of the primary industry was 692.2 billion yuan, up by 3.8 percent; that of the secondary industry was 5,145.1 billion yuan, up by 9.1 percent; and that of the tertiary industry was 4,962.2 billion yuan, up by 7.5 percent. In the first quarter of 2012, the gross domestic product went up by 1.8 percent on quarterly bases.

1. Grain Production Showed Good Momentum and Livestock Production Witnessed Steady Growth.

According to the planting intention survey conducted among more than 70 thousand rural households, the planting area for spring crops was basically stable and grain crop maintained growth momentum. The planting area of early rice will reach 5.8 million hectares, an increase of 50 thousand hectares over that in the previous year. The area for spring corn will continue to rise and that for cotton will decrease by about 4 percent. The proportion of first and second grade seedlings of winter wheat accounted for 86.9 percent of the total. In the first quarter of this year, the total output of pork, beef, mutton and poultry reached 22.27 million tons, a year-on-year growth of 3.9 percent. Of this total, the output of pork was 15.11 million tons, up by 4.0 percent. The number of pigs in stock was 455.57 million, up by 3.9 percent, while the number of slaughtered pigs was 199.89 million, a year-on-year increase of 3.6 percent.

2. Industrial Production Achieved Steady Growth with Enterprises Profits Decreased to Some Extent.

In the first quarter of 2012, the total value added (calculated at comparable price) of the industrial enterprises above designated size was up by 11.6 percent year-on-year. An analysis on different types of enterprises showed that the value added growth of the state-owned and state holding enterprises went up by 7.2 percent; collective enterprises 9.7 percent; share-holding enterprises 13.8 percent; and 6.4 percent growth for enterprises funded by foreign investors or investors from Hong Kong, Macao and Taiwan provinces. The year-on-year growth of heavy industry was 11.0 percent, and 13.2 percent for the light industry. All the 41 industrial divisions registered year-on-year growth. In terms of different areas, the growth in eastern, central and western regions was 8.9 percent, 16.9 percent and 14.5 percent respectively. Out of the 471 kinds of industrial products, 345 of them registered year-on-year increase in output. Of this total, electricity went up by 7.1 percent, rolled steel up by 6.5 percent, cement up by 7.3 percent, ten kinds of nonferrous metals up by 5.8 percent, motor vehicles maintained the same level of growth with the output of cars grew by 0.2 percent, and ethylene went down by 0.9 percent. In the first quarter, the sales ratio of industrial enterprises above designated size was 97.5 percent, or 0.3 percentage point lower than that in the same period of last year. The export delivery value of the industrial enterprises above designated size reached 2,317.5 billion yuan, up by 7.4 percent. In March, the total value added of the industrial enterprises above designated size was up by 11.9 percent year-on-year, or 1.22 percent month-on-month.

In the first two months of this year, the profits made by industrial enterprises above designated size stood at 606.0 billion yuan, down by 5.2 percent year-on-year. Among the 41 industrial divisions, 23 divisions registered year-on-year increase in profits, 1 division maintained the same level as that in the previous year, 14 divisions witnessed reduction in profits, 1 division turned into losses, and 2 divisions suffered further losses. In the first two months, the costs of primary activities of the industrial enterprises above designated size accounted for 84.75 percent of the turnover from their primary activities, a slight increase of 0.04 percentage point over that in 2011. The profit rate of industrial enterprises above designated size from their primary activities was 5.02 percent.

3. The Growth of Investment in Fixed Assets Slowed Down at High Level with Further Improved Investment Structure.
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In the first quarter of 2012, the investment in fixed assets (excluding rural households) was 4,786.5 billion yuan, a year-on-year growth of 20.9 percent (a real growth of 18.2 percent after deducting price factors), or 2.9 percentage points lower than that in 2011. Of this total, that in the state-owned and state holding enterprises reached 1,519.1 billion yuan, an increase of 9.0 percent. The investment in the primary industry reached 88.6 billion yuan, up by 35.8 percent year-on-year; that in the secondary industry was 2,127.0 billion yuan, up by 24.6 percent; and that in the tertiary industry was 2,571.0 billion yuan, up by 17.6 percent. Of the investment in the secondary industry, that in industry reached 2,066.5 billion yuan, up by 23.9 percent. Of this total, the investment in mining was 130.2 billion yuan, up by 20.8 percent; manufacturing 1,724.4 billion yuan, up by 24.8 percent; and the production and supply of electricity, heat, gas and water 211.9 billion yuan, up by 18.4 percent. The investment in infrastructural facilities (excluding the production and supply of electricity, heat, gas and water) was 671.9 billion yuan, down by 2.1 percent. In term of different areas, the growth in eastern, central and western regions was 18.9 percent, 27.1 percent and 26.9 percent respectively. The funds in place for investment in the first quarter of 2012 were 7,097.1 billion yuan, up by 17.5 percent. Specifically, the government budgetary funds went up by 24.9 percent, domestic loans up by 5.0 percent, self-raising funds up by 26.7 percent, foreign investment down by 1.9 percent and funds from other sources down by 3.0 percent. The total planned investment in newly-started projects was 3,634.1 billion yuan, a year-on-year increase of 23.0 percent. The number of projects started in the first quarter was 61,778, or 8,516 more than that in the same period of 2011. In March, the investment in fixed assets (excluding rural households) went up by 0.64 percent month-on-month.

4. Investment Growth in Real Estate Development Continued to Drop and the Sales of Commercial Buildings Declined Year-on-Year.

In the first quarter of 2012, the total investment in real estate development was 1,092.7 billion yuan, a year-on-year growth of 23.5 percent (a real growth of 20.7 percent after deducting price factors), which was 4.4 percentage points lower than that in the year 2011, or 10.6 percentage points lower than that in the same period of last year. Of this total, the investment in residential buildings went up by 19.0 percent, which was11.2 percentage points and 18.4 percentage points lower respectively. Floor space of houses newly started in the first quarter was 399.46 million square meters, up by 0.3 percent, which was 15.9 percentage points lower than that in 2011, or 23.1 percentage points lower than that in the same period of last year. Specifically, the floor space of residential buildings started in the first quarter dropped by 5.2 percent, while it went up by 12.9 percent in 2011 and 19.6 percent in the first quarter of last year. The floor space of commercial buildings sold reached 152.39 million square meters, down by 13.6 percent, while it was 4.9 percent growth for the year 2011 and 14.9 percent growth in the first quarter of last year. Of this total, that of residential buildings went down by 15.5 percent, while it grew by 3.9 percent for year 2011 and 14.3 percent in the same period of last year. The sales of commercial buildings in the first quarter were 867.2 billion yuan, down by 14.6 percent, while it grew by 12.1 percent in 2011 and 27.3 percent in the same period of last year. Of this total, that of residential buildings was down by 17.5 percent, while it went up by 10.2 percent in 2011 and 25.9 percent in the first quarter of last year. In the first quarter of this year, the land space purchased by real estate development enterprises was 78.59 million square meters, down by 3.9 percent, while it grew by 2.6 percent in 2011 and 32.7 percent in the same period of last year. The floor space of commercial buildings for sale was 301.22 million square meters, up by 35.5 percent, which was 9.4 percentage points higher than that in the previous year or 19.5 percentage points higher than that in the same period of last year. The sources of funds for real estate development enterprises in the year reached 2,084.7 billion yuan, up by 8.2 percent, which was 5.9 percentage points lower than that in 2011, or 10.4 percentage points lower than that in the same period of 2011. Specifically, the growth of domestic loans was up by 12.6 percent, self-raising funds up by 25.0 percent, foreign investment down by 22.4 percent and funds from other sources down by 8.0 percent.

5. Sales at Domestic Market Enjoyed Steady and Relatively Fast Growth and Sales Growth of Motor Vehicles and Household Appliances Slowed Down.

In the first quarter of 2012, the total retail sales of consumer goods reached 4,931.9 billion yuan, an increase of 14.8 percent (a real growth of 10.9 percent after deducting price factors). Specifically, the retail sales of the enterprises (units) above designated size stood at 2,292.1 billion yuan, up by 15.6 percent. Analyzed by different areas, the retail sales in urban areas reached 4,268.8 billion yuan, up by 14.9 percent, and that in rural areas stood at 663.1 billion yuan, up by 14.6 percent. Grouped by consumption patterns, the total income of catering industry was 542.7 billion yuan, up by 13.3 percent year-on-year; and retail sales of goods was 4,389.2 billion yuan, up by 15.0 percent. In particular, the retail sales of enterprises (units) above designated size reached 2,117.7 billion yuan, up 15.7 percent. Specifically, the sales of motor vehicles rose by 11.0 percent, or 3.2 percentage points lower than that in the same period of 2011; furniture grew up by 25.4 percent, or 0.9 percentage point higher; and household appliances and audio-video equipment went up by 0.6 percent, or 19.9 percentage points lower. In March, the total retail sales of consumer goods rose by 15.2 percent year-on-year (a real growth of 11.3 percent after deducting price factors), or 1.18 percent month-on-month.

6. The Growth of Imports and Exports Slowed Down and Foreign Trade was Basically Balanced.

The total value of imports and exports in the first quarter of 2012 was 859.37 billion US dollars, a year-on-year growth of 7.3 percent. The total value of exports was 430.02 billion US dollars, up by 7.6 percent; and that of imports was 429.35 billion US dollars, up by 6.9 percent. The trade surplus was 670 million US dollars. Of the total value of imports and exports, that from general trade was 452.67 billion US dollars, up by 8.1 percent; and that from processing trade was 304.73 billion US dollars, up by 4.4 percent. Among the value of exports, that from general trade was 200.5 billion US dollars, up by 7.9 percent; and that from processing trade was 196.07 billion US dollars, up by 6.3 percent. Among the value of imports, that from general trade was 252.17 billion US dollars, up by 8.2 percent; and that from processing trade was 108.66 billion US dollars, up by 1.2 percent.

7. Money Supply Kept Steady Growth and Newly Increased Loans Increased to Some Extent.

By the end of March, the balance of broad money (M2) was 89.56 trillion yuan, a year-on-year growth of 13.4 percent, or 0.2 percentage point lower than that at the end of the previous year; the balance of narrow money (M1) was 27.80 trillion yuan, up by 4.4 percent, or 3.5 percentage points lower; the balance of cash in circulation (M0) was 4.96 trillion yuan, up by 10.6 percent, or 3.2 percentage points lower. The amount of outstanding loans of all financial institutions in the first quarter was 57.25 trillion yuan, grew by 2.46 trillion yuan, or an increase of 217.0 billion yuan as compared with the end of March last year. The amount of outstanding deposits of all financial institutions was 84.69 trillion yuan, an increase of 3.76 trillion yuan, or 218.5 billion yuan less than that in the same period of last year.

8. The Year-on-Year Growth of Consumer Price Fell Back while Producer Price Declined by a Large Margin.

In the first quarter of 2012, the consumer price went up by 3.8 percent year-on-year, which was 1.6 percentage points lower than that in 2011, or 1.2 percentage points lower than that in the same period of last year. Specifically, the price went up by 3.8 percent in cities and 3.8 percent in rural areas. Grouped by commodity categories, prices for food rose by 8.0 percent; tobacco, liquor and articles rose by 3.7 percent; clothing up by 3.6 percent; household facilities, articles and maintenance services up by 2.4 percent; health care and personal articles grew by 2.6 percent; transportation and communication rose by 0.2 percent; recreation, education, culture articles and services grew by 0.1 percent; and housing went up by 2.0 percent. In March, the consumer prices went up by 3.6 percent year-on-year, or 0.2 percent month-on-month. In the first quarter, the producer prices for industrial products went up by 0.1 percent, which was 5.9 percentage points lower than that in 2011, or 7.0 percentage points lower than that in the same period of last year. In March, the price dropped by 0.3 percent year-on-year, or up by 0.3 percent month-on-month. The purchasing price for industrial producers was up by 1.0 percent year-on-year, which was 8.1 percentage points lower than that in 2011, or 9.2 percentage points lower than that in the same period of last year. In March, the price was up by 0.1 percent both year-on-year and month-on-month.

9. Urban and Rural Residents’ Income Increased Rapidly with a Higher Growth for Rural Residents.

In the first quarter of this year, the per capita total income of urban households was 7,382 yuan. Specifically, the per capita disposable income of urban households was 6,796 yuan, a year-on-year growth of 14.0 percent, or a real growth of 9.8 percent after deducting price factors. Of the per capita total income of urban households, the year-on-year growth of wage income was 13.8 percent; transferred income 15.1 percent; net income from business operation 13.1 percent; and 15.1 percent from property income. The per capita cash income of rural households was 2,560 yuan, up by 17.0 percent year-on-year, or 12.7 percent in real terms. Specifically, the growth of wage income was 17.5 percent; household operation income 15.4 percent; property income 12.3 percent; and 25.6 percent from transferred income. The number of rural migrant workers in the first quarter was 163.71 million, up by 3.4 percent year-on-year. The average monthly income of migrant workers was 2,173 yuan, up by 16.6 percent. In the first quarter of 2012, the median of per capita disposable income of urban households was 5,658 yuan, up by 14.2 percent year-on-year; the median of per capita cash income of rural households was 1,872 yuan, up by 20.3 percent.

Despite the slight drop in economic growth in the first quarter, the national economy still developed in a reasonable growth interval. However, great attention should be paid to some outstanding contradictions and problems in economic operation, such as exports stabilization, increasing operation difficulties in enterprises, especially small and micro ones, the decline of profits in certain divisions, and prices rising pressure. In the next phase, guided by the scientific outlook on development, we should keep making progress steadily, balance the relationships of steady and comparatively rapid economic development, the adjustment of economic structures and the management of inflation expectation, and make efforts to achieve a sound and fast economic growth and realize a harmonious and stable society.

Notes:

1. The growth rate of gross domestic product, value added of industrial enterprises above designated size and its sub-items are real growth by using comparable prices. The growth rates of other indicators are nominal growth by using current prices unless otherwise specified.

2. Approved by the State Council, the seasonally adjusted indicators of the following four would be released by the National Bureau of Statistics from April 2011: the quarterly gross domestic product (GDP), the month-on-month changes of value added of industrial enterprises above designated size, investment in fixed assets (excluding rural households), and total retail sales of consumer goods.
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According to the auto-revision function of the seasonal adjustment model, quarterly GDP of 2011 and the month-on-month changes of the value added of industrial enterprises above designated size, investment in fixed assets (excluding rural households), and total retail sales of consumer goods from February 2011 to February 2012 have been revised. The revised figures and figures for March as well as GDP of the first quarter of 2012 are as follows:

Month-on-Month Changes

Value Added of
Industrial Enterprises
above Designated Size
(%)

Investment in
Fixed Assets
(Excluding Rural
Households)
(%)

Total Retail Sales
of Consumer Goods
(%)

2011 February

0.93

-0.23

1.35

March

1.09

2.58

1.35

April

0.91

1.71

1.33

May

0.94

1.83

1.29

June

1.33

1.38

1.43

July

0.80

1.66

1.28

August

0.90

1.39

1.34

September

1.09

2.01

1.37

October

0.85

1.85

1.34

November

0.86

1.04

1.29

December

1.10

1.14

1.45

2012 January

0.63

1.47

1.02

February

0.84

1.91

1.31

March

1.22

0.64

1.18

The quarter-on-quarter growth of GDP in each quarter of 2011 and in the first quarter of 2012 was 2.2 percent, 2.3 percent, 2.4 percent, 1.9 percent and 1.8 percent respectively.
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3. From 2012, the NBS implemented the new Industrial Classification for National Economic Activities (GB/T4754-2011). For more detailed information, please refer to: http://www.stats.gov.cn/tjbz

4. The eastern areas include 11 provinces and municipalities: Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong and Hainan; central areas cover 8 provinces: Shanxi, Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei and Hunan; western area include 12 provinces, autonomous regions and municipality: Inner Mongolia, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Qinghai, Ningxia and Xinjiang.

5. Data of imports and exports are from the General Administration of Customs; data of money supply and deposits and loans are from the People’s Bank of China.

6. The median of per capita income of urban and rural households refer to the per capita income of household lied in the middle of all surveyed households which are ranked from low to high based on per capital income level.

John Lounsbury

Sources:









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