China Q4 GDP likely to show a recovery while December data shows return in food inflation pressur...

CHINA Q4 GDP LIKELY TO SHOW A RECOVERY WHILE DECEMBER DATA SHOWS RETURN IN FOOD INFLATION PRESSURE, SAYS WEI YAO OF SOCGEN. SHOWS: HONG KONG, CHINA (JANUARY 11, 2012) (REUTERS - ACCESS ALL) WEI YAO, CHINA ECONOMIST, GLOBAL RESEARCH AND STRATEGY, SOCIETE GENERALE CIB 1. REPORTER OFF CAMERA SAYING: "China December inflation data came out at 2.5%. How are you interpreting the data? And what are the implications for the government's growth bias?" 2. WEI YAO SAYING: "Clearly that food inflation pressure is coming back and we think it's going to be there and together with basic effect, the inflation is going to keep rising in the first half of 2013. So that basically means the monetary policymakers may have to focus more on inflation." 3. REPORTER OFF CAMERA SAYING: "Is that too soon?" 4. WEI YAO SAYING: "We don't think they will make big moves like interest rate hike or hike required reserve ratio, but we do think they'll be more careful in terms of liquidity management. So basically they may lower their monetary money growth target, they may lower the bank loan target." 5. REPORTER OFF CAMERA SAYING: "China GDP figures comes out next week. What can we expect? 6. WEI YAO SAYING: "The Q4 GDP growth of 2012 has got definitely going to be higher than in Q3. That's clear based on all the data we have seen so far. We may even get some positive surprise from there. And given the momentum, it is also clear to us that the growth will keep recovering in at least the first quarter of 2013." 7. REPORTER OFF CAMERA SAYING: "What will be the implications for policies?" 8. WEI YAO SAYING: "Well that would provide a more comfortable backdrop for the policy meetings clearly. We think the most important thing is that we all know that China need to reform. Big change, structural change, difficult decisions. So if the growth is off to a good start, it means they will have more leeway and less pressure to focus on the long-term picture. So we do think that at the March, meeting it will be interesting to see what are the concrete reform moves that the policymakers will make this year." 9. REPORTER OFF CAMERA SAYING: "Given the economic data we have seen coming from China - what is the outlook of the off-shore yuan?" 10. WEI YAO SAYING: "The movement so far is actually quite reasonable given that usually if the economy recovers, the currency will strengthen and this is exactly we see at the moment. And the pattern we had in the past 2 years is that every time the yuan start to strengthen, there will be a lot of interest in offshore investment vehicles like the C and H bond and such things like that. So we think it may actually bring another round of small increase in the interest there which definitely going to help the offshore yuan market development."