While Western observers still debate the future of the Chinese economy, on the ground in China there’s little evidence of a significant slowdown. Indeed, the country’s recent economic indicators reflect a rebound.

According to data released by China’s National Bureau of Statistics this week, industrial production surged by 10.1 percent in November compared to a year earlier. It also reported that retail sales jumped by 14.9 percent last month, making their strongest showing in eight months.

As the US economy continues to show signs of improvement and the crisis in Europe seems to be abating, global demand for Chinese consumer products is picking up. Chinese exports grew by 2.2 percent on a month-over-month basis versus a decline of 5.8 percent in October and were up 2.9 percent year-over-year. While weaker than expected, this export trend seems to be driving a noticeable improvement in the local economy.

The Chinese property market is also showing renewed signs of health. Overall real estate sales grew by more than 30 percent last month, the biggest boost in nearly three years. Residential property sales were up by 42.9 percent from a year earlier while total property spending has hit CNY5.4 trillion year-to-date. New construction is also picking up, but it’s not entirely clear by how much due to inconsistent regional reporting. However, data shows that property development investment was up by 28.5 percent.

That pace of construction will certainly accelerate next year. The Chinese Ministry of Housing and Urban-Rural Development reports that about 6 million new affordable homes will be built in 2013. Already Chinese banks are discounting mortgage rates by as much as 15 percent to help the government meet its goal of making homeownership more affordable.

Meanwhile, China’s new premier, Li Keqiang, has talked quite a bit about making it easier for migrants to become permanent residents of China’s cities, increasing both their earnings and spending power.
The recovery is also being driven by the infrastructure spending spree of China’s new leadership, which is expected to continue.

So far this year, more than USD134 billion in subway investment has been approved in 32 systems and rail spending has increased as Chinese authorities address heavy traffic congestion in the country’s major cities. Highway investment has also grown by nearly 40 percent this year and, in all, about $160 billion has been spent on infrastructure in 2012 with more than $14 billion in spending approved last week alone. That, in turn, is boosting Chinese consumer confidence and fueling domestic spending.

Thanks to November’s strong showing, it is now expected that Chinese gross domestic product will grow by 7.9 percent in the fourth quarter, breaking a nearly two-year trend of declining growth. In 2013 the Chinese economy is expected to grow by 8 percent.

Valid concerns still exist about the sustainability of China’s economy and the recent positive data points don’t amount to a trend yet. Some analysts have even expressed skepticism about the data’s validity. But there’s one key data point that shows that China’s economy really is on the rebound, as I explain below.

Keeping the Lights On

Electricity is an item that can’t be stockpiled and stored, so generation and consumption data help verify other indicators.

According to data released by Chinese utilities, electricity production in the country surged by 7.9 percent in November and reached its highest point so far this year. Total consumption was up by about 9 percent. Overall, total electricity generation is expected to rise by about 6 percent this year.

Since China’s economy is extremely energy intensive there isn’t a direct correlation between power generation and economic growth. But in this case, the one seems to match the other based on reports that generation capacity that had been idled has been restarted in recent months—particularly in the heavily industrialized coastal provinces—and isn’t counted in the official data which primarily measures new capacity.

So while there’s no denying that some Chinese economic data is finessed to please policy makers, the current data appears valid.

While electricity statistics are a handy verification of growth, they’re also indicative of a bullish trend for electricity producers. See this month’s Stock Spotlight for the best way to play China’s growing electricity market.