1:59 AM
Strong China data points to more rate rises
Addison Ray
By Langi Chiang and Kevin Yao
BEIJING | Fri Dec 10, 2010 4:02am EST
BEIJING (Reuters) - Chinese imports and exports jumped in November, bank lending topped forecasts and property investment powered ahead, a series of numbers that could clear the way for the central bank to raise interest rates as soon as this weekend.
The robust data released on Friday also offered a double dose of good news for the global economy: a reminder that Chinese demand was still growing apace and an indication that the U.S. and European recoveries were picking up steam.
China has been slow to tighten monetary policy this year, partly for fear of a double-dip recession in the developed world.
But with Chinese inflation running at its fastest clip in more than two years, analysts are now looking for the world's second-largest economy to unleash a more aggressive mix of rate rises, currency appreciation, lending restrictions and higher reserve requirements for banks.
"From every angle, the case for further liquidity and credit tightening, as well as rate hikes and appreciation are pretty strong," said Tao Wang, economist with UBS in Beijing.
Another strong month for China's trade surplus, meanwhile, could fuel fresh international criticism of its exchange rate regime. The United States and Europe say that an undervalued currency gives Chinese exporters an unfair advantage in global markets
November imports rose 37.7 percent from a year earlier, easily topping forecasts for a 24.2 percent increase, powered by China's voracious appetite for commodities.
Chinese imports have developed a habit over the past two years of surprising on the upside. In that respect, the 34.9 percent jump in exports, above market expectations for a 22.0 percent increase, was the bigger surprise.
"The rise in exports appeared to be driven by rush orders just ahead of the Christmas period," Mingchun Sun and Kevin Lai, economists at Daiwa Capital Markets, said in a note.
Evidence for that view was in the fact that shipments of final goods to markets such as Europe and the United States outstripped those of intermediate goods to Asia.
"It remains to be seen, of course, whether this can be sustained," they added.
Exports to the United States were up 32.2 percent, while shipments to the European Union, China's biggest trading partner, climbed 33.8 percent.
The rise in exports left China with a hefty surplus of $22.9 billion in November, the seventh straight month of impressive trade performance. During that stretch, its average surplus has been $22.2 billion.
The trade data boosted the main Chinese stock index by 1.1 percent though investors remained cautious ahead of inflation data to be released over the weekend. The Shanghai index had been flat before the release of the data.
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