China’s GDP lowest in 10 quarters although higher than expected

China had 4 Q 2011 GDP results of 8.9% which was the lowest GDP number in 10 quarters or  2.5 years but it was still better than 8.7% level that economists had expected.

Although China’s GDP of 8.9% is strong and the envy of world economies, China’s GDP growth trend has progressively weakened each quarter in 2011.

In 2011 China had 9.1% GDP in 3 Q , 9.5% GDP in 2 Q, 9.7 % GDP in 1 Q, and 9.8% GDP  in 4 Q 2010. 

Exports are weakening and investment money into China has been decreasing.

EU banks have been de-leveraging and withdrawing investment money out of China, especially in December 2011.

China’s retail sales grew 17.1 % in 2011. Chinese shares are surging in Asian trading, partly because speculation is growing that the Chinese government will engage in some easing measures in the first half of 2012.

Europe

Europe’s rescue fund, the EFSF, was downgraded from AAA to AA+ by Standard’s & Poor.

The fund’s downgrade won’t reduce its 440 billion euro capacity. However, on Monday ECB President Draghi told the EU Parliament that the rating cut with the EFSF fund has a consequence, noting that the fund could potentially have to lend less or receive additional contributions from its AAA rated member countries such as Germany.

Germany refused to boost their EU rescue contribution to the EFSF.  Merkel’s spokesman, Steffen Seibert, told reporters the the volume of guarantees that the EFSF has at the present time “would be sufficient to fulfill its current obligation.”

Seibert pointed out that EU leaders agreed to establish the European Stability Mechanism (ESM) becomes operational by mid 2012, earlier than expected.

EFSF Chief Executive Klaus Regling reported, ” The EFSF has sufficient means to fulfill its commitment under current and potential future adjustment program until the European Stability Mechanism (ESM) by July 2012.”

Auto Sales in Europe

European auto registrations fell 1.4% in 2011 to 13.6 million.

Four out of 5 of Europe’s largest markets witnessed a decline.

J.D. Power estimates more contraction for European auto registrations in 2012, only 12.6 million.

 

 

 

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