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Second-Quarter Pace of Economic Growth May Have Slowed: China Week Ahead
Statistics scheduled for release this week may show China’s economic growth slowed in the second-quarter as compared with the first three-months of the year.
China’s economy may have expanded 10.5 percent in the three- month period ended June 30, according to the median estimate of 28 economists in a Bloomberg survey. That compares with a growth pace of 11.9 percent in the first quarter and 10.7 percent in the fourth quarter of last year.
The government has cracked down on speculation in the nation’s housing market and raised requirements for mortgage loans in a bid to curb home price gains. That combined with the waning effects of a government stimulus package introduced at the end of 2008 and the debt crisis in Europe, China’s biggest export market, may led to slowing economic growth.
New yuan-denominated loans were 603.4 billion yuan ($89 billion) last month, less than the 639.4 billion yuan of lending in May, the Chinese central bank said yesterday. M2, the broadest measure of money supply, slowed for the seventh straight month in June, growing 18.5 percent from a year earlier, according to the People’s Bank of China.
China’s foreign-exchange reserves, the world’s largest, rose the least in 11 years in the second quarter. Holdings rose by $7.2 billion to $2.454 trillion at the end of June from the end of March, the central bank said. Reserves dropped 2 percent in May, according to data posted to the central bank’s website, the first monthly decline since February 2009.
Chinese exports posted an unexpected rebound in June. Overseas sales gained 43.9 percent last month from a year ago to $137.4 billion while the trade surplus more than doubled to $20 billion, the highest level in eight months, the General Administration of Customs said July 10.
Rate Swaps Dropped
China’s interest-rate swaps dropped last week after the central bank said it favored policies to bolster economic growth, prompting speculation it will delay increases in borrowing costs.
The People’s Bank of China said on July 8 it would stick to a moderately loose monetary policy as growth becomes better balanced between consumption, investment and exports. It has added cash to the money market for seven consecutive weeks via open-market operations.
One-year interest-rate swaps, which measure the fixed cost to receive the floating seven-day repurchase rate, fell 5 basis points last week to 2.23 percent, data compiled by Bloomberg showed. Contracts due in three years receded 2 basis points in five days to 2.67 percent.
Bonds Advanced
Government bonds advanced last week on easier liquidity between banks. The yield on the 2.53 percent note due in June 2015 slid 4 basis points to 2.59 percent, and the price of the security added 0.18 per 100 yuan face amount to 99.72, the funding center data showed.
China’s stocks posted their biggest weekly gains this year on Friday, on speculation the government will wind back tightening measures that helped make the gauge Asia’s worst performer in 2010.
The Shanghai Composite Index climbed 2.3 percent. Poly Real Estate Co. paced gains by developers after the central bank said it will stick to a moderately loose monetary policy and the Oriental Morning Post reported some Shanghai banks have resumed lending to third-home buyers. PetroChina Co. and Yanzhou Coal Mining Co. led an advance by energy producers, China’s worst performers this year.
Stock Index Climbed
The Shanghai Composite, which tracks the bigger of China’s two stock exchanges, climbed 55.77, or 2.3 percent, to close at 2,470.92 on Friday. Last week’s gain was the most since the final week of 2009, when the gauge advanced 4.3 percent. The index traded at 17.6 times reported earnings at the end of last week, the lowest in 18 months.
The yuan traded at 6.7716 per dollar on Friday, little changed from 6.7761 a day earlier and 6.7711 a week ago, according to the China Foreign Exchange Trade System. The currency has strengthened 0.8 percent since the central bank loosened control of the exchange rate on June 19.
The following is a list of important events in China this week:
Event Date Agricultural Dev Bank to sell 15 bln yuan of 5-year bonds12 June data for Foreign Direct Investments12-16 Ukraine Foreign Minister visits China 13-15 U.K. Foreign Minister visits China 14 Chinese government to sell 28 bln yuan of 1-year bonds 14 China reports second-quarter GDP data, Beijing15 China reports June Producer Price Index, Beijing15 China reports June Consumer Price Index, Beijing15 China reports June retail sales data, Beijing15 China reports June industrial production data, Beijing15 China reports June fixed-asset investment, Beijing 15 Agricultural Bank’s trading debut, Shanghai 15 German Chancellor visits China 15-18
--John Liu in Beijing. Editor: Eugene Tang.
To contact Bloomberg News staff on this story: John Liu in Beijing at +86-6649-7565 or jliu42@bloomberg.net
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