China poised to lead recovery
CHINESE investment surged in May, fanning hopes the world’s third-largest economy may lead a global recovery, although a record slump in Japan’s first quarter GDP reinforced expectations any rebound would be slow.
China’s investment pick-up, which came on the back of large government stimulus spending, offset surprisingly weak figures for exports and imports, which both fell for a seventh consecutive month and at an accelerating pace.
Global data has given increasing signals of a rebound from the deepest recession in six decades, driving stock markets sharply higher from a March trough. European Central Bank policymaker Christian Noyer yesterday said the global economy could resume growth between the end of 2009 and mid-2010.
However, Noyer warned businessmen in Hong Kong that rising unemployment could still hurt consumption and growth prospects. Financial markets also worry that huge US government spending and Fed cash injections will spark inflation and undercut any nascent rebound.
China has sought to cushion the blow from falling exports with a 4 trillion yuan ($585bn) economic stimulus plan.
Data yesterday showed annual growth of fixed asset investment in urban areas in the January-May period accelerated to 32.9 per cent. from 30.5 per cent in the first four months of the year, suggesting the stimulus is working.
“This is a welcome sign of momentum building in the Chinese economy, and it’s good for the global outlook,” said David Cohen of Action Economics in Singapore.