Encouraging data from China became more evident as the dust of the U.S. fiscal crisis settled. It became clearer that Chinese production for local demand is more profitable with the Consumer price Index exhibiting a 3.1% annual rise, while producers pay less to support their production process with the Producer Price Index decreasing by an annual 1.3%. Thursday marked a very positive point for the Chinese economy as the Year over Year Gross Domestic Product showed a 7.8% annual increase, quite the positive note from the concerns raised by the previous quarter’s 7.5%. Additional positive data was the Industrial Production exhibiting a 9.6% annual increase. The hypothesis derived from the increasing wedge between Consumer and Producer Prices was also evident at retail sales, which showed a 13.3% increase.
The improvement in China could be regarded as somewhat predictable, given the stimulus program unveiled in July. However, the revised data certainly put smiles on a few faces in Beijing, as it will be much easier for china to reach its 7.5% annual GDP growth goal. Evidently, the positive data sent Hong Kong’s Hang Seng up 1.1%, while the Shanghai Composite index gained another 0.2%.
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