China’s economy showed new signs today that its recovery is gaining with the announcement that investment, industrial output and credit all expanded rapidly in August 2009 The increases in output and investment were both ahead of analysts’ forecasts and followed a series of figures in July which suggested the recovery might be weakening. The one exception was on the trade front where the decline in exports and imports compared to the year before was sharper than expected. “The combination of strong growth and still deep deflation shows that the V-shaped recovery is on track, while inflation pressure remains subdued,” said Sun Mingchun, economist at Nomura International. “The recovery of the real economy is well on track,” said Yu Song at Goldman Sachs. The robust August numbers will intensify the debate about when China should begin withdrawing some of the massive fiscal and monetary stimulus it has injected into the economy since the end of last year. Speaking on Thursday at the meeting of the World Economic Forum in Dalian, Chinese Premier Wen Jiabao ruled out any early change of course. “China’s economic rebound is unstable, unbalanced and not yet solid,” he said. “We cannot and will not change the direction of our policies when the conditions aren’t appropriate.”
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