Chinese data released yesterday and today suggest that growth is again accelerating slightly in early 2010. The export recovery continues unabated and domestic demand still looks solid with investment demand holding up surprisingly well despite the government's recent moves to curb credit growth. On the other hand, inflationary pressure is increasing - albeit not alarmingly so.
Today's data supports the view that China will soon start to raise interest rates and probably resume appreciation of CNY. Although today's data was strong, we do not believe it will push forward monetary tightening. We still expect China to hike its leading interest rates in late April/May and resume appreciation of CNY in May.
China Growth picking up speed again
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