Distortions in the data from the Lunar New Year holiday and fake invoicing that inflated numbers last year make it harder to assess the true picture. As the nation chases a 7.5 percent annual growth target, set at last week’s meeting of the National People’s Congress, officials need to contain stresses in the financial system from the credit boom that began with stimulus measures in 2008.People see a lot of negative news coming out of China: growth momentum is slowing and when there is a default of one company they tend to think it’s going to be a systemic problem and spill over into the rest of the economy.
Trade will be a “clear drag” on growth in the first quarter and the yuan should weaken this week. The trade data explain some of the downward pressure on the yuan in February -- it can be justified not only by central bank guidance but by actual deterioration of demand and supply in the forex market.
Exports for January and February combined declined 1.6 percent, the most for that period since 2009, according to previously released data, and compared with a 23.6 percent gain a year earlier. Wang Estimates for the underlying growth rate was about 6 percent.
Economists were split last month over whether January’s trade figures showed a re-emergence of inflated export invoices to disguise capital inflows after authorities started a crackdown in the second quarter of last year. The yuan’s decline last month may help squeeze out the practice, according to Australia & New Zealand Banking Group Ltd.
“The trade figures will become more real in the coming months” as the currency has “become much more volatile and less predictable than before,” ANZ China economists led by Hong Kong-based Liu Li-Gang wrote in a report yesterday.
The trade growth target for this year is 7.5 percent, the National Development and Reform Commission said in its annual work report to the legislature last week. China is confident it can achieve the goal, Commerce Minister Gao Hucheng said at a March 7 briefing.
The statistics bureau will today provide data on February inflation and factory-gate prices, followed by January-February industrial production, retail sales and fixed-asset investment on March 13. The central bank will publish data on February credit and money supply over the next week.