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Indicators point to signs of recovery

SEVERAL economic indicators for December have shown signs of recovery, though China's fourth-quarter growth slowed, said the head of the National Bureau of Statistics.

"Last December, the economy was hit quite hard by the global financial crisis, but the December figures also began to show some positive changes and these changes are very important for us," Ma Jiantang said.

The rebound in money supply, which rose 17.8 percent, the quickest in seven months, and loan growth in December means that the moderate monetary policy has been effective, Ma said.

Retail sales jumped 17.4 percent last month in annualized terms, up from 16.6 percent in November, with a rebound in goods like cars, garments and cosmetics. Ma also pointed out that there was a pick-up in investment sentiment citing an ING report which said investor confidence in China rose to 103 in the fourth quarter from 88 in the third.

"Almost all major monthly indicators point to a recovery," driven by rising domestic demand - a result of aggressive fiscal and monetary stimulus - and stable exports, Merrill Lynch's economist Ting Lu said.

Crude steel production, a major indicator of industrial activities, rose to 37.79 million tons in December from 35.19 million tons in November, after China in November announced the 4-trillion-yuan (US$585 million) fiscal stimulus package to support growth.

China has raised export tax rebates by several steps to help revive exports. In December, the government increased export tax refunds on 3,770 tariff lines including mechanical and electrical products, or 27.9 percent of all exports. Exports shrank 2.2 percent in November, the first drop in seven years.

Goods that are eligible for export tax refunds saw positive export growth of 4.8 percent in December, against an overall negative growth of 2.8 percent, Ma said. "This means our export policies have started to show results," he said.

Ma said the government would wait and see whether these positive changes are sustainable or just temporary. "But such positive changes are just like sunshine in cold winter and light at the break of a dawn, and also little sparks that can ignite a flame," he said, adding he has confidence in China's economy.

China's gross domestic product growth slowed to 6.8 percent in the fourth quarter from 9.0 percent in the third as the global financial crisis deepened into domestic economy.


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