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POLITICAL ECONOMY
China exports and imports surge ahead of expectations
by Staff Writers
Beijing (AFP) Oct 13, 2014


China auto sales up 2.5% in September: industry group
Shanghai (AFP) Oct 13, 2014 - China's auto sales rose just 2.5 percent year-on-year in September, the slowest growth for any month this year, an industry group said Monday, as a weak economy took a toll on the world's largest car market.

Total sales hit 1.98 million vehicles for the month, the China Association of Automobile Manufacturers said in a statement.

In August, auto sales reached 1.72 million vehicles, a year-on-year rise of 4.0 percent.

Although the group cited rising seasonal demand from the traditionally slow summer months, it added year-on-year growth was "relatively low" in September.

Passenger car sales alone rose 6.4 percent to 1.70 million vehicles in September, the association said.

For the first nine months of the year, sales of vehicles -- both passenger and commercial -- rose 7.0 percent to 17.0 million units, it said.

Last year, auto sales in China reached 21.98 million vehicles, helped by a recovery in Japanese brands which were hit by a political row between Tokyo and Beijing over disputed islands.

China's economy grew 7.5 percent year-on-year in the second quarter this year, improving marginally from 7.4 percent in the first quarter, which was the worst since a similar 7.4 percent result in July-September 2012.

At the same time, a government crackdown on corruption and an austerity campaign have hurt the luxury auto segment, analysts say.

The government has also taken aim at foreign auto makers, which dominate the market, for what authorities claim is monopoly actions over prices of parts and complete vehicles, fining some.

Still, US auto giant General Motors (GM) posted its best September ever in China with sales rising 15.2 percent year-on-year to 319,936 units, according to the company.

GM expects to sell a record number of cars in China, its biggest market, this year, exceeding last year's tally of 3.16 million, GM China President Matthew Tsien said last month.

No need for big stimulus in China: PBOC economist
Washington (AFP) Oct 11, 2014 - China's slowing economy does not need any big stimulus, because the jobs market continues to be strong, the Chinese central bank's chief economist said Saturday.

Ma Jun, the top economic advisor at the People's Bank of China, said that although the country's overheated real estate sector is slowing sharply, he did not see a substantial net impact on jobs.

Instead, the growth in domestic consumption and the shift in the economy from manufacturing toward services is creating more opportunities than are lost.

"The labor market is getting tighter despite the slowdown in economic growth," he said at the Institute of International Finance in Washington.

Ma, who joined the PBOC in April after serving as Deutsche Bank's top China economist, said the real estate sector, which has taken 20 percent of all domestic investment, could worsen.

"Some further deceleration maybe be possible," with large knock-on effects to the cement and steel industries.

Even so, he said: "We are not too concerned... The labor market is at least stable and may be improving."

Ma said overall the government does not need to unleash large stimulus, which could at any rate end up back in the real estate sector where bad loans are already mounting.

"At the macro level, I think we need to avoid excessive stimulus," he said. Across China "the investment-to-GDP ratio is still too high."

China's exports and imports both rose more than expected in September, Customs data showed Monday in a positive signal for the world's second-largest economy, but analysts warned that fundamentals remained weak.

The trade surplus more than doubled year-on-year to $31.0 billion as exports rose 15.3 percent to $213.7 billion, the General Administration of Customs announced, while imports climbed 7.0 percent to $182.7 billion.

The rise in exports accelerated from August's 9.4 percent growth and was ahead of the median forecast of 12.5 percent in a poll of 15 economists by Dow Jones Newswires.

The survey had predicted a fall of 2.4 percent in imports, matching a surprise decline in August.

The positive figures are the latest contradictory indicator for China's economy, a key driver of global growth.

Customs spokesman Zheng Yuesheng attributed the improvement to major economies recovering and external demand strengthening.

"The good momentum is expected to continue in the fourth quarter," he added.

But analysts urged caution.

Julian Evans-Pritchard, China economist with Capital Economics, said that while import growth rebounded, "this should not be taken as a sign that domestic demand growth is turning a corner".

"The strength seems to have been driven by a surge in imports for processing and re-export," he added. "As such, it mostly reflects a brighter export outlook rather than a pick-up in domestic demand."

The improvement was expected to prove short-lived, he said, citing oversupply in the struggling property sector and "subdued commodity demand".

The expansion in exports was probably linked to the launch of Apple's iPhone 6, Nomura analysts said in a research note, pointing out that mobile phone shipments rose 47 percent year-on-year, and by $6.7 billion from August.

"External demand faces a high level of uncertainty due to weakening European growth and recent geopolitical risks," they added, cautioning that underlying domestic demand "remained weak".

But Barclays was more positive, saying the "big upside surprises" in imports and exports pointed to growth recovering in the fourth quarter.

- Property risks -

Recent reports have suggested expansion in China -- which stood at 7.7 percent last year, maintaining its slowest pace in more than a decade -- is weakening even after authorities took limited stimulatory measures.

Industrial production growth slowed sharply in August to its lowest level for more than five years, official data showed last month, while house prices have fallen for five consecutive months.

Officials are targeting economic growth of "about 7.5 percent" this year, the same as last year's objective.

The goal is normally exceeded, but senior officials have repeatedly sought to play down its significance this year.

Last week the World Bank cut its forecast for Chinese growth to 7.4 percent for 2014 and 7.2 percent for 2015. The International Monetary Fund left its predictions unchanged at 7.4 percent and 7.1 percent but warned of "near-term growth risks", especially in real estate.

Ma Xiaoping, a Beijing-based economist with HSBC, told AFP that property remained "the biggest risk area in terms of internal demand".

Despite the strong figures Chinese stocks closed down Monday, with the benchmark Shanghai Composite Index slipping 0.36 percent.

September's trade surplus was lower than August's record $49.8 billion, and also came in below expectations of $42 billion.

In the third quarter exports rose 12.8 percent year-on-year while imports crept up 0.9 percent, Customs said without giving totals.

For the first three quarters, China recorded a total trade surplus of $231.6 billion, the statement said, up 37.8 percent year-on-year.

Exports climbed 5.1 percent over the nine-month period to $1.7 trillion, while imports rose 1.3 percent to $1.46 trillion.

Trade with the European Union was up 10.2 percent at 2.81 trillion yuan ($460 billion), 14.5 percent of the total, and up 5.2 percent with the US to 2.48 trillion yuan, 12.8 percent of the total.

But bilateral trade with Hong Kong fell 13 percent year-on-year to 1.61 trillion yuan.

With Japan it crept up 0.4 percent to 1.43 trillion yuan.

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