Kina levererar starka siffror över hela linjen. Detta betyder också att centralbanken kommer fortsätta med sina åtstramningar. Detta får börsen att falla. Kinas case är unikt i världen idag. Myndigheterna försöker balansera hygglig tillväxt utan att åstadkomma överhettning. Det är lättare sagt än gjort. Myndigheterna vet nämligen att får tillväxten (dvs utlåninig från banker och M2%) härja fritt då kommer inflationen ta fart ordentligt…. och den ekonomiska historiken visar att ett lands REALA BNP tillväxt mår som bäst om Inflationen ligger på ca 3% +/- 2%. Ligger den utanför detta intervall kommer förr eller senare den reala BNP tillväxten att avta och andra problem ta vid. Inför 2011 kan man gör det enkelt för sig att följa balansgången mellan PMI/M2% och CPI/CPIcore. Den relativa styrkan kommer vara avgörande för hur EM kommer gå relativt DM.

Trots detta är trenden stigande sedan september-10. Om jag fick gissa, om vi ska gå mot 23,000 eller 25,000 på kort sikt, så måste det bli 23,000…. men det är ett rent spec BET.

Så här skriver CS,

China: Strong growth, strong inflation in Q410

The headline GDP growth for Q410 was stronger than expected at 9.8% yoy, compared to consensus estimate of 9.4% yoy and 9.6% yoy in the previous quarter. This is achieved by stronger retail sales and rising inventory. This resulted in a 10.3% full-year growth for 2010. Based our own calculation, annualized QoQ growth has further accelerated to 10.7%, compared to 9.6% in Q310 and 8.3% for 2Q10. Overall, this is a set of impressive numbers from the growth perspective, especially in view of the current global environment and domestic economic transformation.

Nominal retail sales in December had improved to 19.1% yoy in December (about 14.3% yoy in real term), versus 18.7% yoy in November. Industrial production growth for December accelerated slightly to 13.5% yoy versus 13.3% in November. Fixed asset investment growth slowed to 21.7% yoy in December after the 28.9% yoy surge in November, and rose 24.5% yoy in 4Q (23.1% yoy in 3Q).China does not have an official inventory data, but PMI survey suggested that output has outpaced new orders, hence we suspect that part of the improvement is due to inventory rebuilding. Regardless, we think the slower production growth seen during autumn is now behind us, though the rebound has been muted.

CPI inflation for December was 4.6% yoy, a softening from the 5.1% yoy in November, but it was achieved almost entirely through the base effect. On a month-on-month basis, CPI rose 0.5%. Food inflation remained as a key driver, at 9.6% yoy. However, we wish also to point out that non-food inflation has reached 2.1% yoy, the forth consecutive monthly rise, as salary increases and higher material/utility costs start to bite.

This set of data is unlikely to change the policy course, and we still expect mild tightening in the monetary front and continued expansion in the fiscal front. The government has been trying hard to boost private consumption, with measures from encouraging salary increase to launching retail subsidies. We expect tax cut in March through raising the entry level of individual tax. While local government funded infrastructure investment has slowed down sharply, central government’s mega projects, as part of the 12th five-year-plan, are kicking in.

For monetary policy, we think the PBoC still favors quantitative tightening, through raising reserve requirement ratio and controlling lending activities. The process has been more frequent since September, but the monetary authority is taking small steps in the “normalization” process. We think rate hike is inevitable, in view of a large gap in negative real interest rates.

In our view, growth is not much of a worry but inflation must be watched carefully in 2011. We expect CPI to reach and possibly break the 6% yoy level around mid-year. While food inflation remains high, we anticipate services inflation to emerge after a huge salary increase in 2010, where we reckon a near 40% pay rise for migrant workers on average.