Economic Updates: GDP, Inflation, FDI & Trade

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While the IMF estimates that China’s GDP will grow at 10 percent in 2008 (below an earlier NDRC estimate), a bigger number, which is causing more angst is that for inflation. Already hitting the headlines (and driven by food price increases) Goldman Sachs recently increased its prediction from 4.5 percent (which was in line with the NDRC’s 4 percent estimate) to 6.8 percent for 2008, while January figures indicate CPI hit 7.1 percent before rising to 8.7 percent in February.

Meanwhile foreign direct investment (FDI) in China, while being redefined, has also maintained its momentum, as Xinhua reports:

    “China used 11.2 billion U.S. dollars in foreign direct investment (FDI) in January, a growth of 109.78 percent over the same period of last year, sources with the Ministry of Commerce said… The Commerce Ministry sources said China’s FDI absorption had entered a new stage, in which quality, instead of quantity, had begun to play a major role.

    …Last year, China attracted 74.77 billion U.S. dollars in FDI, increasing 13.59 percent year-on-year and ranking first among developing nations for the 15th year in a row.”

As for trade, and the all important trade surplus, AP notes:

    “China’s trade surplus shrank in February as sales of goods to the United States fell…The 63 percent drop in the trade gap from a year earlier was due partly to a longterm slowdown in export demand, but February was an unusually weak month, analysts said.

    …February’s trade surplus was $8.6 billion, down from $23.7 billion in the year-earlier period, according to China’s customs bureau.

    …China’s imports in February surged 35 percent to $78.8 billion from the year-earlier period, according to the customs agency. The rate of export growth, meanwhile, plunged to 6.5 percent from January’s 26 percent.
    …Exports to the United States fell 5 percent in February to $16.4 billion, while imports of American goods jumped 33 percent to $6.1 billion.

    Beijing is under pressure from the United States and the European Union to ease trade barriers and currency controls that they say are adding to its swollen trade surplus. Some American lawmakers are calling for punitive action if Beijing fails to act.

    …The February trade gap was the smallest since March 2007, but that month’s $6.9 billion gap was considered abnormally low in a fluke caused by changes in export-tax policy. It has been two years since China regularly posted monthly trade surpluses under $15 billion.

    …The trade surplus with the 27-nation European Union, China’s biggest trading partner, narrowed by 15 percent to $10 billion, according to the government data.”

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