China growing at sustainable pace: data

Miners may be entangled in a bitter row over the government's resources tax, but
there will be relief that China probably won't be about to slam on the interest rate
brakes to curb inflation.
A spray of economic data on Friday from the Asian giant - Australia's number one
trading partner - included annual inflation nudging above its government's three per
cent target.
But for the month of May, consumer prices actually fell 0.1 per cent.
Commonwealth Securities economist Savanth Sebastian said there has been worries over
China's inflation pressures.
"However the latest data would suggest that has been mitigated - at least for one
more month," Mr Sebastian said.
China's National Bureau of Statistics said government spending on infrastructure
slowed slightly to 25.9 per cent annually, industrial output nudged down to 16.5 per
cent growth, while retail sales accelerated to 18.7 per cent.
Mr Sebastian said while Chinese authorities will remain poised to lift rates, for
now the economy is growing at a sustainable pace, which "is very much in our
interests".
Treasurer Wayne Swan expects Australia's exports earnings will be boosted by nearly
$50 billion in the next financial year by further price gains in iron ore and coal.
Addressing a conference in Brisbane on Friday, Mr Swan said contract iron ore prices
in the current quarter had doubled from a year ago and coal prices had also risen
substantially.
"We've already seen big increases in prices for key commodity resources over the
past five years, and further rises are in prospect," Mr Swan told the Australia
India Business Council National Conference in Brisbane.
He said as a result Australia's terms of trade were likely to exceed the peaks seen
in 2008.
But it's not just about China.
India had posted "remarkable" 8.6 per cent growth in the year to March, alongside
China's 11.9 per cent economic expansion in the same period.
India has become Australia's third largest export destination, having tripled in the
last five years.
By 2015 the International Monetary Fund projects that India will receive more than
one-tenth of Australia's merchandise exports, Mr Swan said.
Australia's own solid economic performance was highlighted in Thursday's data
showing a drop in the jobless rate to 5.2 per cent, nearing five per cent that
Treasury assumes is full-employment.
Economists say this is likely to keep the Reserve Bank of Australia (RBA) on its
toes for future interest rate moves.
Most homeowners still believe that higher rates are on the cards, despite the
central bank holding fire on an increase this month.
A Westpac-Melbourne Institute survey found 90 per cent of respondents expect more
rate rises by June next year, with 46 per cent predicting a cumulative rise of up to
one per cent over the next 12 months.
"Consumers remain much more hawkish on rates than the market," Westpac senior
economist Matthew Hassan said releasing the findings.
He calculated that the spread of responses in the survey equated to an average
expected rise of 85 basis points over the next year.
This would lift the standard variable mortgage rate from 7.4 per cent currently to
8.25 per cent, well above the average of 7.5 per cent seen over the past 15 years.
Money market pricing suggests a cumulative rate increase of just 25 basis points by
June 2011, while Westpac itself is forecasting a 75 basis point increase.