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Tuesday, May 13, 2008

China Retail Sales April 2008

China's retail sales climbed (in money terms)at the fastest pace since at least 1999 in April, but since inflation was also up near a decade high the actually - inflation adjusted - rate of increase was of course much less. Sales rose 22 percent to a record 814.2 billion yuan ($116 billion) in April after gaining 21.5 percent in March, the statistics bureau said today. If we look at the comparison on the chart below, what we can really say is that there is no sign, at this point, of any economic slowdown, at least as far as retail sales go.

Rising incomes will help to counter the effects of surging prices, stock market declines, and the scrapping of a seven-day May holiday, State Information Center economists led by Fan Jianping said in a report published this month. Real urban disposable incomes climbed 11.5 percent in the first quarter from a year earlier to 4,386 yuan ($627). Rural earnings rose 18.5 percent to 1,494 yuan.

Meantime China's money-supply expansion unexpectedly acceleratedin April, adding pressure on the central bank to prevent cash from further fueling inflation which is already close to the fastest pace since 1996.

M2, the broadest measure, rose 16.9 percent at the end of April from a year earlier to 42.9 trillion yuan ($6.1 trillion), the People's Bank of China said today, after gaining 16.3 percent in March.

Outstanding local-currency loans rose 14.7 percent at the end of April from a year earlier, the central bank said. Lenders extended 463.9 billion yuan of new loans last month, bringing the total to 1.8 trillion yuan for the first four months. Outstanding local-currency deposits rose 17.7 percent at the end of April from a year earlier, the central bank said. Household savings rose 99.2 billion yuan from the previous month.


Anonymous said...

The key qualifier is "according to the Chinese government." This regime is known to fabricate data in its 50 year history, especially during times of economic crisis to hide the problem. But no worries, finance pundits won't doubt these figures, so long as the fake data gives lift to the markets worldwide. Woe to the unsuspecting investors!

Edward Hugh said...


"This regime is known to fabricate data in its 50 year history,"

Well I understand your point, but this problem of data reliability is perhaps much more general (ie involves many more countries) than perhpas you imagine.

The thing is, from a macroeconomic perspective what actually matters is the movement in the data rather than the data itself. That is, unless you assume that the data is totally chaotic, the same bias should be there next month as it is this month, so you just strip that out and you can get some idea of what is actually happening.

Also the mounting reserves at the Bank of China are evidently a reflection of something.

Inflation readings are among the most internationally contested data areas, and here the temptation to "fudge" is evidently greatest, but at the end of the day registered export prices are much more difficult to play around with, and it is at this point of sale that things really matter.

As for the investors, well I am neither one of them, nor do I advise them. I am simply interested in macroeconomic phenomena.