The Banking and Strategy Initiative

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NEW DRAFT: Catching up with China | Advantage Research

There is a lot of work required to put this discussion in shape but it is definitely the raging topic for the decade for economies around the world.

China has definitely outgrown the revolution, the crisis and is now hurtling so fast, it has asked the banks to keep the brakes on. As the SMH just mention a couple of days back, and NYT reiterated, it is well onth eway to cross Japan out of the mix and take its place as the World #2. GDP growth for 2009 was 8.7%

The NY Times put the statistics succinctly here

The National Bureau of Statistics also announced on Thursday that industrial production in December increased by 18.5 percent and retail sales rose by 17.5 percent. The December consumer price index grew by 1.9 percent and producer price index by 1.7 percent.


China’s economy grew 10.7 per cent in the fourth quarter compared with the same period a year earlier but the strong growth was accompanied by higher inflation, raising fears that Beijing may introduce stronger measures to avoid economic overheating.

Consumer prices rose 1.9 per cent in December from a year earlier, a rapid acceleration on the 0.6 per cent increase in November, when the index swung back into inflationary territory after nine months of deflation.

Producer prices rose 1.7 per cent year on year in December, well up from November’s 2.1 per cent fall.

China’s CPI does not cover prices of assets such as real estate.

Mr Ma also said the government was also worried about continued overcapacity in many industries.

China’s GDP growth:

Period Year-on-year growth (%)
Q4/2009 10.7 Q3/2009 9.1 Q2/2009 7.9 Q1/2009 6.1
Q4/2008 6.8 Q3/2008 9.0 Q2/2008 10.1 Q1/2008 10.6
Q4/2007 11.2 Q3/2007 11.5
Source: Bloomberg

via / China / Economy & Trade – China grows 10.7% in fourth quarter.

Whatever path china takes to temper and even channel this growth next, it is likely not so much in control as it would look, but the next blueprint is already in place with more than 10 new CBD being developed, The quandary of overcapacity in Industry and runaway inflation that worries them, would have pressed lesser mortals into making more mistakes, but the government’s ethos here is of a different grain. You can just imagine them in offices and conferences, tracking each plan item in great detail and executing the same by taking care of any negative energy for each of those items..sounds theatrical, but they also seem quite impressionable with Avatar and Google being blocked for influences on the populace which you and I would not even imagine.

Will the US catch them? India?

I think now, this is mostly a rhetorical question as everyone knows the limitations of the US models and the deficit facing them. Similar is the case for India, – We may even grow at 12% in the near enough future, but we will not have IIP growing at 20%.

Ofcourse with the recent crisis one wonders whether we will even attempt to get into growing retail sales that aggressively, again that being a function of economic well being and performance and there-in maybe there is a chance for us to compete with China.

The credit crunch

CHINESE policy makers have curbed new lending to avoid a repeat of last year's credit explosion, causing the Australian dollar to fall three-quarters of a cent.

Commodities markets and shares in Australia and Shanghai also fell after the banking regulator confirmed he had ordered some major banks to stop lending for the rest of this month.

The chairman of the China Banking Regulatory Commission, Liu Mingkang, said he had targeted banks that had not met prudential supervision requirements.

''For those that failed to meet these standards, we told them to limit lending,” he said in Hong Kong.

“[Chinese banks] need to get ready for the wrong kind of borrowers and the wrong kind of weather.”

Mr Liu said this year's new lending will be confined to 7.5 trillion yuan ($1.2 trillion), down from last year's extraordinary 9.6 trillion yuan.

via China’s credit crunch.

Talk about it!


This entry was posted on January 21, 2010 by in Amitonomics, China, Emerging Markets, Global and tagged , , , , , , , , , , .


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