Chinese imports and exports jumped in November, bank lending topped forecasts and property investment powered ahead, a series of numbers that could clear the way for the central bank to raise interest rates as soon as this weekend.
The robust data released on Friday also offered a double dose of good news for the global economy: a reminder that Chinese demand was still growing apace and an indication that the U.S. and European recoveries were picking up steam.
China has been slow to tighten monetary policy this year, partly for fear of a double-dip recession in the developed world.
But with Chinese inflation running at its fastest clip in more than two years, analysts are now looking for the world's second-largest economy to unleash a more aggressive mix of rate rises, currency appreciation, lending restrictions and higher reserve requirements for banks.
From every angle, the case for further liquidity and credit tightening, as well as rate hikes and appreciation are pretty strong, said Tao Wang, economist with UBS in Beijing.
Another strong month for China's trade surplus, meanwhile, could fuel fresh international criticism of its exchange rate regime. The United States and Europe say that an undervalued currency gives Chinese exporters an unfair advantage in global markets
November imports rose 37.7 percent from a year earlier, easily topping forecasts for a 24.2 percent increase, powered by China's voracious appetite for commodities.
Chinese imports have developed a habit over the past two years of surprising on the upside. In that respect, the 34.9 percent jump in exports, above market expectations for a 22.0 percent increase, was the bigger surprise.
The rise in exports appeared to be driven by rush orders just ahead of the Christmas period, Mingchun Sun and Kevin Lai, economists at Daiwa Capital Markets, said in a note.
Evidence for that view was in the fact that shipments of final goods to markets such as Europe and the United States outstripped those of intermediate goods to Asia.
It remains to be seen, of course, whether this can be sustained, they added.
Exports to the United States were up 32.2 percent, while shipments to the European Union, China's biggest trading partner, climbed 33.8 percent.
The rise in exports left China with a hefty surplus of $22.9 billion in November, the seventh straight month of impressive trade performance. During that stretch, its average surplus has been $22.2 billion.
The trade data boosted the main Chinese stock index by 1.1 percent though investors remained cautious ahead of inflation data to be released over the weekend. The Shanghai index had been flat before the release of the data.
PRESSURE ON YUAN
Even without criticism from its major trading partners in the West, rising inflation in China could put upward pressure on the yuan.
The trade surplus data comes at a time when domestic inflation is rising, indicating that the pace of yuan appreciation against the dollar could quicken next year, said Lu Zhengwei, an economist at the Industrial Bank in Shanghai.
Chinese consumer price inflation may have hit 5.1 percent in the year to November, a 28-month high, state media reported on Friday.
China's wide M2 measure of money supply rose 19.5 percent in November from a year earlier, while banks extended 564 billion yuan in new local currency loans in November, the central bank said. Both numbers were slightly ahead of expectations.
Banks have already just about hit the full-year 7.5 trillion yuan loan quota set by the government.
Total new loans will surely exceed 8 trillion yuan this year, which will pave the way for the central bank to adopt further tightening measures in the future, said Gao Shanwen, chief economist at Essence Securities in Beijing.
We expect at least one more interest rate rise this year, and the move could come very soon, he added.
China's leaders on Friday opened the three-day Central Economic Work Conference, a gathering where they will set the policy direction for next year.
The Politburo, the Communist Party's ruling body, set the tone for the meeting last week when it announced a shift to a prudent monetary policy from the appropriately loose stance of the past two years.
In separate data, the National Bureau of Statistics said property prices edged up 0.3 percent in November from a month earlier, while real estate investment rose 36.7 percent from a year earlier.
The property sector has borne the brunt of China's tightening this year, with the government determined to root out speculation.
Analysts said the buoyant figures should help ease worries about the possibility of collateral damage to the economy from the measures to cool the red-hot housing market. (Additional reporting by Alan Wheatley and Huang Yan; Writing by Simon Rabinovitch; Editing by Ken Wills and Neil Fullick)