BEIJING, April 17 -- Hopes that China's slowest quarter on record could mark a bottom to the global crisis were echoed by JPMorgan's better-than-expected results on Thursday, but weak European output and US housing data emphasized the downturn's grip. China, the world's third-largest economy, started this year with its weakest quarter since records began in 1992 as the 6.1 percent growth rate fell below the 6.8 percent level of the prior quarter. But analysts saw optimistic signs in quarter-on-quarter growth, which they estimated in the range of 5.3-6.2 percent. "It's still an OK number which shows China is bottoming out," said Calyon senior economist Sebastien Barbe, adding that "the policy response -- a lot of bank lending and investment by state-owned companies -- is helping contain the slowdown." Industrial output rose 5.1 percent year on year in the first three months, much of the growth achieved in March, which witnessed 8.3 percent growth, the NBS said. Retail sales rose 15.9 percent in real terms, up 3.6 percentage points from a year earlier. Fixed assets investment jumped 28.8 percent year-on-year, 4.2 percentage points higher than the growth in the same period last year. China's economy has taken on several "positive changes", and performed "better than expected," since the government announced a series of measures to boost the economy, including a US$586 billion stimulus package and plans to revitalize 10 key industries, spokesman for the National Bureau of Statistics (NBS) Li Xiaochao told a press conference on Thursday. Mixed News from US Financial Sector As the broader financial sector struggles in the United States, General Growth Properties Inc, the second-largest US mall owner, underscored the trouble caused by frozen lending by filing for Chapter 11 bankruptcy protection. In the biggest real estate failure in US history, the company said its core business was solid but that bankruptcy was the only way it could refinance debt. The International Monetary Fund said the global recession is likely to be unusually long and severe, with recovery sluggish since the crisis took root in reckless bank lending to the US housing market. The IMF called for aggressive and coordinated monetary and fiscal policies, saying restoring confidence in the financial sector was important for a recovery to take hold. But a top US Federal Reserve official said the recession in the world's largest economy should end by mid-year with growth slowly picking up, adding there were "encouraging signs that support cautious optimism." "I do not expect a strong recovery," Federal Reserve Bank of Atlanta President Dennis Lockhart said in prepared remarks, The current contraction would "give way to slow and tentative growth as early as the third quarter," he said. The results of "stress tests" to gauge how the 19 biggest US banks would fare should the recession worsen will be publicly disclosed on May 4, a regulatory official said. Markets are anxiously waiting to see which banks are on the route to recovery and which need more government rescue money. Wall Street stocks turned higher at midday as the weak data was offset by forecast-beating quarterly profits at JPMorgan Chase and positive reports from the technology sector. Grim European Numbers Recovery prospects were cloudier in Europe as data showed record fall in the industrial output. Industrial output in the euro zone fell by a record 18.4 percent year-on-year in February, and inflation halved to an all-time low in March, adding to pressure on the European Central Bank to ease policy. Still, there were positive comments in Europe a day after the Federal Reserve said the US recession may be nearing an end with signs of stability in some sectors. "If you follow all the indicators, you see some stabilization, albeit at a low level," said European Central Bank Governing Council member Erkki Liikanen. The worst of Britain's recession "may well be behind us," Bank of England Monetary Policy Committee member-designate David Miles said. Europe's auto sector, given state support through purchase incentives and loans, showed some signs of rebounding in March with new car registrations down 9 percent, about half the fall seen in the quarter. Markets Get Boost A Reuters poll showed confidence at Japanese companies remaining near record lows, but Swiss drugmaker Roche and French food group Danone both stuck to their 2009 earnings targets. Nokia's quarterly earnings were slightly below forecast, but the world's top cellphone maker said demand was becoming more predictable in the second quarter. JPMorgan, the No. 2 US bank, reported quarterly earnings per share of $0.40 as a better investment banking performance offset higher losses from consumer debt. The Dow industrial index fell 0.1 percent, the S&P 500 rose by 0.2 percent higher and the tech-heavy Nasdaq added 1.4 percent. Asian shares rose and European stocks hit a two-month high on JPMorgan's results and the comments by Nokia. The dollar and yen rose against the euro. While oil edged up nearly 1 percent toward $50 a barrel, gains were limited by the mixed US and Chinese economic data. (Source: China Daily) |
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