China Continues to Show Strength

[B]Equity markets climbed higher during the week spurred on by a number of key data points that bolstered investor’s outlook on the global economy.[/B] In Canada, better than expected employment data helped the Canadian and US markets move higher. A robust jobless claims and better than expected trade balance in the US was also positive. Strong GDP in Japan was the final piece the pushed markets higher. For the week, the S&P 500 Index climbed higher by 5 points to 1109, moving above the 50-day moving average.

[B]China is the main talking point at the end of the week.[/B] In an unusual move China brought forward by a couple of days the release of its CPI and industrial production figures from September 13 to tomorrow September 11. The shift to a weekend release is even more unusual and it has set the chins wagging. There is speculation the data will be strong, especially the CPI, and that they PBOC needs this for “fundamental cover” to hike rates before the markets open on Monday. While acknowledging no compelling explanation for the shift, the speculation seems a bit of a stretch. Such “cover” is unnecessary. China reported today that property prices in August rose 9.3% from a year ago, which is the slowest pace in six months. The yuan did rally, perhaps helped by such speculation; perhaps helped by the rapprochement that seems to be the outcome of the US senior official visit. China also reported August trade figures. The $20.03 billion surplus was considerable smaller than the market expected (~$27 billion) and the July surplus of $28.7 billion. The surprise was on both the export side (less) and the import side (more). Those advocating a tougher line against China in the US Congress may emphasize that August was the third consecutive monthly surplus above $20 billion. Ahead of the November midterm US elections, this may play well in media. The reluctance of the Obama Administration, like the Bush and Clinton Administrations before it, to cite China as a manipulator of the foreign exchange market, and its more recent decision not to support fresh sanctions on Chinese aluminum because the hidden subsidy of an undervalued currency has raised the ire.

[B]Friday is also a notable day for China because despite the sharp upward revision in Japanese Q2 GDP, it appears that it is then that it has moved into second place in terms of economic size.[/B] Japan’s Q2 GDP was revised to 1.5% from 0.4% as widely expected following the recent data that showed stronger capex. The dollar value of Japan’s GDP in Q2 was $1.295 trillion while China’s was $1.337 trillion. In purchasing power terms China has been the world’s second largest economy for several years. Capital expenditures were indeed revised sharply higher in Japan’s revised estimate of GDP. The initial estimate of 0.5% was revised to 1.5%. There was little change in most of the other components. Lastly, deflation pressures make it more difficult to see what is happening in Japan. In nominal terms, unadjusted for prices, the Japanese economy contracted by 0.6% in Q2.

Analysis provided by Exto Capital

Since the new century has been started we can say that China is progressing very rapidly in every sector of life. I am not sure about the information technology but China seems to be progressing in Electronics.