China's GDP And Infrastructure Spending Supports Construction Equipment And Raw Materials

From the Chinese National Bureau of Statistics (www.china.org.cn/business/2012-01/17/content_24426253.htm)

Chinese economy grew by 9.2 percent in 2011 from a year earlier, the National Bureau of Statistics (NBS) announced Tuesday.

GDP growth for the fourth quarter last year stood at 8.9 percent year on year, said the NBS. The quarterly growth was the slowest in 10 quarters. China has set the full-year growth target at 8 percent in early 2011, after its economy grew 10.3 percent in 2010.

The country's economy expanded 2 percent in the fourth quarter on a quarterly basis, NBS chief Ma Jiantang said at a press conference.

According to preliminary statistics, the country's GDP reached 47.16 trillion yuan (7.26 trillion U.S. dollars) in 2011, Ma said.

Impressive numbers given the situation in the rest of the world. Q4 growth managed to beat estimates of 8.7%.  The release goes on to say:

NBS data showed China's industrial value-added output growth decelerated in 2011 from a year earlier to 13.9 percent year-on-year. The country's fixed-asset investment, a measure of government spending on infrastructure, rose 23.8 percent year-on-year. Retail sales, a key indicator of consumer spending, rose 18.1 percent year-on-year in December 2011, up from the 17.3-percent growth seen in November.

The infrastructure spending continues on a torrid pace and should continue to support construction equipment and raw materials/mining. I would expect metal/mining and equipment stocks to perform well today as participants focus on this news (as well as German investor sentiment) rather than the looming default of Greece.
On Monday, China's top statistical official Ma Jiantang stated that price increase pressures continue to pose a threat despite the lower 4.1% CPI in December.

In the short run, fixed-asset investment, which remains a major engine driving economic growth in China, is expected to maintain rapid growth in 2012, while residential consumption, another growth engine, will keep stable growth this year, he said.

www.china.org.cn/business/2012-01/17/content_24425203.htm
This continues to support the prospects of both resource economies and companies.

China's Inflation Eases in December

Via Reuters:

China's annual inflation eased to 4.1 percent December, the lowest level in 15 months, giving the government more room to tilt economic policy away from restraining prices and towards supporting sagging growth.

The annual rate of headline consumer price inflation was slightly ahead of expectations of 4.0 in the benchmark Reuters poll of economists, but below November's 4.2 percent, reinforcing the view of many that the central bank is poised to ease monetary policy.

The December figures was the closest that inflation came in 2011 to hitting the official target of 4 percent for the year, leaving the average rate above 5 percent.

The country's customs agency said on Tuesday that China's exports and imports grew at their slowest pace in more than two years in December, fresh evidence of cooling domestic and global economic conditions that could push Beijing towards a more pro-growth policy stance. 

Full article:  Reuters China Inflation

If inflation is viewed as under control (a bit premature, perhaps) then the administration can ease policy in order to help revive "sluggish" growth.  Should this happen, we could see natural resource companies do well as raw material prices would increase with increased demand.  Not saying jump the gun here, just saying to keep your eye on the ball.

France - Just Another Indentured Servant in the Making

On the wire (BBC News - abridged):

China's President Hu Jintao has signed billions of euros' worth of business deals during a state visit to France.

They included spending 10bn euros (£8.6bn; $14bn) on 102 Airbus planes, as well as telecoms and nuclear deals.

On Thursday evening, deputy Chinese Foreign Minister Fu Ying said investment contracts signed that day had already totalled 14bn euros, and said China planned to double the value of its annual imports from France to 56bn euros over the next five years.

The deals apparently included a 2.5bn-euro agreement with French nuclear giant Areva to supply uranium, and another to build a uranium treatment plant in China.

Also, Total said it was planning to invest 2-3bn euros in a Chinese petrochemical plant.

 Mr Hu said in a statement: "China and France share broad common interests and huge potential for co-operation."

From France, Mr Hu will travel on to Portugal on Saturday (see earlier post).

The dependence on Chinese capital is spreading rapidly in the West - no longer is the US the only one feeding at the Chinese trough.  They are not the next economic superpower - they are the current economic superpower.