Page 9 - Forterra

07
Annual GDP & YoY Growth
Annual CPI & YoY Growth
MARKET CONDITIONS 6
The prospects for the Trust for 2013 remain stable, and the
ongoing recovery of the Chinese economy and resurgence
of the real estate sector generally will contribute positively
to the 2013 outlook.
Chinese GDP recorded 7.8% growth for the 12 months ended
31 December 2012. Whilst recording a decline against prior
year GDP growth figures (9.3% in 2011), the most significant
aspect was the 7.9% growth recorded in Q4 a pleasing
rebound from the 7.4% result in Q3, the lowest for seven
quarters.
Domestic demand represented 51.8% of annual GDP and
displaced fixed asset investment as the economy’s major
driver. Underpinned by two interest rate cuts during the
year (total 56 basis points) delivering a current rate of 6.0%
per annum, a loosening of monetary policy evidenced by a
100 basis point relaxation of the Reserve Requirement Ratio
to 20.0% (for large financial institutions), and a 12.6% and
13.5% increase in income for urban and rural households
respectively, retail sales growth peaking at an eight month
high of 15.2% in December 2012 drove annual retail sales
growth to a very respectable 14.3% for the year.
The inflationary environment in China eased considerably
across 2012 remaining well below the government’s target
rate of 4.0% throughout the year. The 2012 CPI inflation of
2.6% year on year (5.4% in 2011) gave the government and
regulators considerable scope for easing monetary policy
which yielded reductions in both interest rates (6.6% per
annum to 6.0% per annum) and the Required Reserve Ratio
(21.0% to 20.0%).
2012 also witnessed the once in a decade power transition
installing Xi Jinping as President-elect replacing Hu Jintao
and Li Keqiang as Premier elect for the outgoing Wen
Jiabao. The new leadership formally commenced their roles
in March 2013. The process to formalize the changeover
and elect the new leadership played out right across the
country at every level of government. This created some
stagnancy in regulatory processes as many decisions were
delayed pending the installation of new leadership teams.
This is expected to be rectified by mid-2013 as the new
leaders look to implement various policy decisions to take
advantage of the improvement in domestic consumption.
6 Source: China National Bureau of Statistics
0
10
20
30
40
50
60
RMB Trillion
0%
2%
4%
6%
8%
10%
12%
14%
16%
GDP GDP Growth Rate
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1.2%
4.8%
5.9%
3.3%
5.4%
1.5%
3.9%
1.8%
2.6%
-0.7%
-0.8%
0.7%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: CEIC
Source: CEIC