China’s Economic Rebound Continues

Another clutch of monthly economic indicators confirm that the slowdown in the economy is done. Factory output, up 10.1%, and retail sales, up 14.9%, hit eight-month highs in November. Even the uptick in inflation to 2% can be read as a sign of recovery. It seems that policymakers’ holding of their nerve through the slowdown and not over-stimulating has borne fruit in a rebound with benign inflation. Monetary and fiscal policy is likely to continue as is for now. Growth for the year is likely to come in comfortably if not excessively above the official target of 7.5%, which will set the pace for 2013 and subsequent years.