CHINA'S STRONG FOURTH QUARTER GROWTH

HONG KONG – Quarterly and monthly indicators released by China point to strong growth momentum in the fourth quarter of 2010. Full-year growth came in at 10.3%, underpinned by Q4 growth of 9.8%. BBVA Bank estimates that China’s fourth-quarter growth (seasonally-adjusted and annualised) at a “very strong” 12.1%, compared to 8.0% in Q3. Headline CPI inflation for December eased to 4.6% year-on-year, from 5.1% in November, due to base effects and a softening in food prices. “Underlying inflationary pressures, nevertheless, remain high, and the December outturn is still well above the authorities’ comfort range,” BBVA says. “Given the strong growth momentum, we anticipate more monetary tightening measures, including three interest rate hikes in 2011, and at least 1% increase in the required reserve ratio (RRR) in addition to the most recent 0.5% RRR hike. We maintain our GDP growth outlook at 9.2% for 2011.” On the demand side, December retail figures grew faster than expected, at 19.1% year-on-year, indicating robust consumer spending. www.bbva.com (ATI).