Last night saw the release of what upon first inspection look like a very solid set of Chinese macroeconomic figures. These appear to show a moderate acceleration in activity and came alongside better than expected prints for retail sales, industrial production and fixed asset investments.

The initial reaction in Shanghai stocks has been an over 1% rise in the country's benchmark, the best performance in the Asia Pacific region overnight save for Tokyo's Nikkei-225.

China's gross domestic product (GDP) grew at a 7.4% year-on-year rate in the third quarter of the year as expected, down from the 7.6% in quarter two.

That was the slowest rate of expansion in 12 years -save for that seen in quarter one of 2009- and for some economists "too close" to the rate of growth thought necessary to maintain social stability.

Nevertheless, those same economists also believe they can see hopeful signs which point to a stabilisation, such as a better tone to exports and a progressive improvement in residential investment.

As well, in quarterly and annualized terms GDP accelerated to a 2.2% pace of expansion, after a 1.8% clip recorded in the previous quarter.

Also noteworthy, speaking after the release of the data a high-ranking Chinese civil servant reassured his audience that the authorities will continue with prudent policies, including a pro-active fiscal policy.

Of interest, the central bank's seven day repo rate today fell by 19 basis points, to 2.6817%, its lowest in two months.

As far as the other economic indicators out today are concerned, industrial production accelerated to a 9.2% pace in September (Consensus: 9%), after 8.9% in the month before.

Retail sales grew at a 14.2% year-on-year rate (Consensus: 13.2%), after 13.2% in August, the quickest since April.

Urban investment accelerated slightly, to a 20.5% rate of increase after 20.2% before (Consensus: 20.2%).

Writing before the releases economists at Nomura were commenting that: "We take these comments to suggest that there may be more positive news coming
today when Q3 GDP numbers and September data are released, reinforcing our view
that growth will likely pick up above 8% in Q4 (Consensus expects growth to be flat in Q4)."

AB

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