China Beige Book signals limits in rebound
China's economic rebound is uneven, with improvements in retailing, real estate and mining countered by rising inventories and lower corporate borrowing, according to a report modelled on the US Federal Reserve's Beige Book.
While shopping outlets and services companies are optimistic, credit conditions signal "this is not yet a period of strong expansion", CBB International, a New York-based researcher, said in an e-mailed summary of its China Beige Book.
The new Communist Party leadership aims to sustain the expansion of the world's second-biggest economy without fuelling property-price gains or adding to banks' bad-loan risks.
The World Bank says growth may be as much as 8.4 per cent next year after a likely 7.9 per cent expansion in 2012, set to be the weakest pace since 1999.
"The economy as a whole saw an uneven rebound in the fourth quarter, driven by strength in retail, real estate, mining and to a lesser extent, manufacturing," said Leland Miller, New York-based president of China Beige Book International.
"But serious structural issues remain, including expanding manufacturing and mining inventories and credit-easing policies that continue to yield increasingly diminished returns."
The China Beige Book's findings are based on a survey of more than 2,000 businesses and interviews with company executives, bank loan officers and branch managers.
The poll, which charts comparisons with the previous three-month period, was carried out from October 26 to December 2. The full report will be released next month.
Official data painted a mixed picture of the economy last month, with new loans and exports trailing economists' median estimates as industrial output and retail sales exceeded forecasts. Banks extended 522.9 billion yuan (HK$642.3 billion) of local-currency loans.
Iron-ore producers strengthened "sharply" as steel demand rose from housing, infrastructure and manufacturing, according to the China Beige Book summary. At the same time, faster gains in inventories in manufacturing and mining call into question "just how sustainable this expansion is", CBB said.
While credit is still easing, bankers are cautious and borrowing costs are rising, with fewer companies taking out bank loans and more turning to so-called shadow lenders, the survey found.
"This mismatch is at the heart of China's conflicting stories about stimulus," CBB said.