China economic recovery intact, but weak exports to drag

In the first 11 months, China's exports and imports grew 5.8 percent from a year earlier, running well below a government 2012 target of 10 percent.

China's exports to the European Union fell 18 percent in November from a year earlier, the sixth straight decline. The Organisation for Economic Co-operation and Development cited the euro area crisis in a report last month warning that exports will remain a weak spot for China's economic outlook.

The OECD forecast China's economy would grow by 7.5 percent in 2012 - in line with a government target - before picking up to expand 8.5 percent in 2013.

Despite efforts to rebalance the economy towards domestic consumption, exports generated 31 percent of gross domestic product in 2011, World Bank data shows, and supported an estimated 200 million jobs.

The People's Bank of China, the central bank, cut interest rates in both June and July and has lowered banks' reserve requirement ratio (RRR) by 150 basis points since late 2011, freeing an estimated 1.2 trillion yuan ($193 billion) for lending.

Most analysts believe room for further policy easing is limited as inflation and property prices start to pick up.

Sunday's inflation report showed China's consumer price index rose 2 percent in November from a year ago, slightly less than forecasts for a 2.1 percent gain and up from 1.7 percent in October. Vegetable prices soared 11.3 percent.

Although that leaves consumer inflation well below Beijing's 4 percent target for 2012, the central bank has said rising prices represent the biggest risk long term as China makes a transition from a planned to a market-based economy.

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