Monday, June 11, 2012

China

China: key May data out over the wkend. Overseas shipments climbed 15.3% yoy, exceeding all 29 estimates in a Bloomberg survey. Industrial output rose by less than 10% for a second month and retail sales increased the least in almost six years excluding holiday-month distortions. Both data trailed forecasts, signaling last week’s cut in interest rates was aimed at countering a domestic slowdown. Analysts say China’s resilience in trade indicates Europe’s debt crisis has yet to produce a collapse in world commerce on the scale of the 2008 global recession. Stronger exports and imports also support the case for Premier Wen Jiabao to adopt a more restrained stimulus than the credit boom that started in late 2008. Inflation in May eased to 3%, the lowest reading in two years and below the govt’s 2012 target of 4%. Bank of America says the decline will offer more room for policy easing; expects the govt to start and speed up more projects and make financing easier by cutting reserve requirements and interest rates, approving more corporate bond issuance and lifting lending restrictions.

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