Markets: Beijing's growth bias

Citigroup’s China economist says Beijing may seek to bolster its economy as it struggles to meet growth targets.

Citigroup’s China economist has returned from a trip to Beijing and says the government may put off any talk or action on moving the economy away from heavy state investment in order to achieve its 2013 growth target of 7.5 per cent.

“Premier Li Keqiang’s speech last week, for the first time since taking office, signaled that the government may put growth ahead of reform,” says Minggao Shen. “Many experts we met believed that 7.5 per cent is the likely floor for this year. It’s possible that this target could be reduced to 7 per cent next year.”

Some observers of the Chinese economy believe the world’s second-largest economy will struggle to meet its growth target this year. China’s finance minister Lou Jiwei said earlier this month said the economy could cope with growth of 6.5 per cent.

Still, the spot price for iron ore imported through the northeast Chinese port of Tianjin rose for the seventh consecutive day to $US130.40, perhaps indicating that steel production and industrial sector activity in China remains healthy.

The Tianjin spot iron ore price has gained 15 per cent since June 26, according to Bloomberg data.

At 1428 AEST shares in Rio Tinto, the world’s biggest iron ore miner, were up 54 cents, or 1 per cent, to $56.69. Iron ore miner Fortescue was unchanged at $3.71 while BHP was down 7 cents, or 0.2 per cent, to $34.12.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles