Investment by Chinese firms abroad rose to $20.5 billion in July through September, almost triple a year earlier, the ministry of commerce said in a statement. Industrial output may rise 16%in the fourth quarter, ministry of industry and information technology official Zhu Hongren said in a briefing, compared with a 13.9% pace of gains in September.
Policy makers may be encouraging Chinese companies to invest abroad in part to help counter pressure for the nations currency to appreciate, analysts said. Investors are betting on the yuan to appreciate in the coming year as Chinas growth accelerates from its weakest pace in a year.
Chinas growth is certain and stable, said Zhu Jianfang, an economist at Citic Securities Co in Beijing. Chinese policy makers see pressure for yuan to appreciate, so they encourage companies to invest abroad to strike the balance. Tuesdays figures came after the government last week reported that China, the worlds third-biggest economy, expanded 8.9% in the third quarter, the fastest pace in a year.
The economy is showing more signs of stabilising, the National Development and Reform Commission said in a statement on its Web site on Tuesday, adding that the governments stimulus measures have been effective. Yuan forwards, which rose to a 14-month high last week, suggest the currency will gain 2.3% against the dollar in the coming year. The 12-month offshore contracts were down 0.2%on Tuesday to 6.6730. The yuan climbed 21% over three years after the government scrapped a fixed exchange rate in July 2005.
Chinas policy on yuan will remain stable until the nations exports recover and improve, Jiang Jianjun, an official in the foreign trade department of the ministry of commerce told an online forum on Tuesday. The projection for Chinas production gains encouraged some investors to sell the dollar on confidence that the global recovery will diminish demand for the US currency as a haven. The dollar rose as much as 0.2% and traded at $1.4894 per euro at 7:55 am in London.
Stephen Roach, chairman of Morgan Stanley Asia, on Tuesday said investors are wrong to bet that China will restrain its unprecedented stimulus after the economy accelerated in the third quarter.
The Chinese really are fixated on one thing and one thing alone which is social stabilitythey dont want to take a risk of another negative growth surprise slowdown, Roach said in an interview on Bloomberg Television in Hong Kong. By contrast, India, Asias third-largest economy after Japan and China, on Tuesday signaled its preparing to raise borrowing costs as inflation pressures build. Inflation in China isnt a big risk for the nation in the foreseeable future, China central bank Deputy Governor Yi Gang said, the China Securities Journal reported separately on Tuesday.
The government will keep the yuan exchange rate basically stable, the Beijing-based newspaper reported, citing comments the Peoples Bank of Chinas Yi made at Peking University on Monday.