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China exports seen rebounding, inflation rising in Oct

Retail sales and M2 money supply growth rates edging up slightly, while investment and industrial output tick down

Reuters BEIJING
Last Updated : Nov 05 2013 | 4:20 PM IST
China's exports are forecast to have rebounded in October after a surprise fall, reinforcing the government's view that the economy has regained some momentum as its prepares to unveil plans to overhaul the world's second-largest economy.

Forecasts in a Reuters poll for October data due out from later this week also have inflation rising to an 18-month high, retail sales and M2 money supply growth rates edging up slightly, while investment and industrial output tick down.

China's leaders have touted stability rather than fast growth as they head into the Communist Party's third plenary session, to be held November 9-12, where they are expected to outline plans to transform the economy into one driven by consumers rather than credit and investment.

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"Given that policymakers have already said that they are no longer worried about meeting the growth target, we expect the focus to be on restructuring reforms," said Jiaguang Shen, an economist with Minzhuo Securities in a note.

State media has quoted President Xi Jinping saying the reform plan would be comprehensive, and a series of articles from the official Xinhua news agency have flagged sweeping changes.

Analysts expect the economy to slow in the December quarter after growing at its quickest pace this year between July and September, in part due to the reform push but also because of global uncertainties.

Those uncertainties were seen in a surprise 0.3 annual decline in exports in September, partly due to weak demand from China's Southeast Asian trading partners.

Exports are forecast to bounce back with a 3.2 % rise in October from a year earlier, with the trade surplus increasing to $23.9 billion from last month's $15.2 billion.

Premier Li Keqiang noted that weak exports were a risk in comments two weeks ago that were only made public on Tuesday, though he reiterated that the government's 7.5 % growth target for 2013 was intact.

The October data is also expected to show only a slight rise in the growth rate for retail sales, which is running above 13 % in annual terms.

New loans are expected to fall to 600 billion yuan from September's 787 billion yuan, which would be the lowest since December 2012, as the government tries to control credit to head off risks from previous rapid loan growth.

"We expect the central bank to continue shifting the monetary stance toward a more neutral position. Less accommodative policies may slow growth tangibly by the end of the year," Citibank economists said in a note.

Signs of inflation are also likely to add to the caution among policymakers. Annual consumer inflation is expected to rise to 3.3 %, the highest since April 2012 and not far from the official target of 3.5 % for 2013.

Trade data will be released on November 8 and inflation, output, urban investment and retail sales data on November 9. Loan growth and money supply figures are due between November 10 and November 15.

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First Published: Nov 05 2013 | 4:12 PM IST

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