While the U.S. economy continues exhibiting signs of deceleration, based on the latest reports, the Chinese economy - now a powerful global presence - expanded “only” a little over 10% in the first quarter of fiscal ’08.
Business in China continues to remain extremely strong and instead of slowing down, their economy is accelerating. Well, to be fair they are actually booming and the latest economic figures prove it.
Final GDP numbers for fiscal ‘07 were revised up from 11.5% to 11.9%, recording the fastest pace in 13 years, while inflation was at 8.7 percent in February, the highest in nearly 12 years.
The country’s foreign-exchange reserves, the world’s largest, surged to $1.68 trillion at the end of March. The trade surplus pumped $41.4 billion into the financial system in the first quarter, a whopping 40% increase from a year earlier.
In the first three months of the year, foreign enterprises invested $27.4 billion in China, jumping 61.3 percent from the same period last year.
Meanwhile, the manufacturing sector saw its Purchasing Managers Index rise to 58.4 in March, extremely bullish on the economy, thus posting the highest level since April 2007.
Additionally, China’s retail sales jumped 20.2% in both January and February over the same two months last year, including a huge 33.8% increase in spending on automobiles.
An interesting fact: Over half a million new autos are hitting the streets in China every month!
The Chinese economy has been the fastest growing economy in the world for almost three decades now, expanding at a 10 percent clip per year in real terms. However, the sharp growth this year has triggered concerns of a surge in hot money inflows, which could come on the back of rises in the yuan and a widening spread between falling US interest rates and rising Chinese rates.
The nation’s central bank increased the rate six times last year.