TO THE POINT: The release of economic figures for April stoked inflation fears again. The CPI rose 2.8 percent in April, challenging the government's goal of keeping inflation below 3 percent. Bank lending in April brought new loans in the first four months to half of the designated loan target cap for the whole year. House prices defied the government's tough policies and continued to increase to a record high in April, but analysts say tightened policies need time to take root. Foreign banks in China face increasing competition from their local rivals, as illustrated by a survey from PricewaterhouseCoopers.

By HU YUE

Figures in April

CPI and PPI

The consumer price index (CPI), the main gauge of inflation, rose 2.8 percent year on year in April, hitting an 18-month record, said the National Bureau of Statistics (NBS).

Yao Jingyuan, chief economist of the NBS, said April's CPI growth was mainly due to rising food prices, particularly vegetables. Food prices, accounting for about one third of the CPI's weight, gained 5.9 percent in April.

"The government should be vigilant and take action now to prevent the price hikes from spreading to the overall stock of food and commodities," Yao said.

Yao said the index would continue to rise year on year given the low base in 2009. It was difficult but still possible to keep CPI growth around 3 percent for the whole year, he said.

The producer price index (PPI), an indicator of inflation at the wholesale level, grew 6.8 percent in April, 0.9 percentage points higher than in March.

But Lu Zhengwei, chief economist with the Industrial Bank Co. Ltd., said the surge in the PPI may not feed into the CPI since enterprises engaged in fierce competition are less likely to pass cost pressures to consumers.

Foreign trade

China's exports in April totaled $119.92 billion, up 30.5 percent from a year ago, while imports reached $118.24 billion, soaring 49.7 percent year on year, said the General Administration of Customs. The trade surplus was $1.68 billion in April, down 87 percent from a year earlier.

From January to April, exports totaled $436.05 billion, up 29.2 percent and imports soared by 60.1 percent to $419.94 billion. Trade surplus in the first four months was $16.11, a slump of 78.6 percent.

It seems Western consumers have opened their wallets again, said Zhang Yansheng, Director of the Institute for International Economic Research at the National Reform and Development Commission. But the exports are not without uncertainties as the European debt crisis threatens to pummel the global economy, he said.

Money supply

Central bank figures showed the broad money supply (M2), which covers cash in circulation and all deposits, increased 21.48 percent year on year to about 65.66 trillion yuan ($9.62 trillion) by the end of April.

New loans

Newly added loans denominated in renminbi reached 774 billion yuan ($113.35 billion) in April, compared with 510.7 billion yuan ($74.89 billion) in March, said the People's Bank of China, the central bank. It was also an increase of 182.2 billion yuan ($26.7 billion) from the same month last year.

The April figure brought new loans in the first four months to more than 3.37 trillion yuan ($493.6 billion), nearing half the 7.5-trillion-yuan ($1.1-trillion) total China has targeted for the full year.

Ha Jiming, chief economist at the China International Capital Corp. Ltd., said the bank lending in April was unexpectedly robust, but the pace will continue to even out as the country gears up to absorb excessive liquidity.

House prices

House prices in 70 large and medium-sized cities jumped a record high of 12.8 percent in April from a year ago, accelerating from the 11.7 percent in March, said the NBS. Prices of new residences soared 15.4 percent while those of used ones went up by 10.5 percent.

There has been a time lag before the government clampdown to filter through the property market, and house prices are expected to top out in May or June, said Chen Guoqiang, Director of the Real Estate Institute of Peking University.

Though prices have largely held up, it is not difficult to find clues of a cooling market somewhere else. The real estate climate index, a measure of property development activities, was 105.66 in April, down from 105.89 in March.

Yin Bocheng, Director of the Real Estate Research Center under the Shanghai-based Fudan University, said policymakers must continue with the austerity policies in case speculators return.

Investment in fixed assets

Urban fixed-asset investments in the first four months this year rose 26.1 percent to 4.67 trillion yuan ($684.4 billion) year on year.

The growth followed a 26.4-percent increase in the first quarter this year, and an increase of 30.5 percent over the first four months in 2009.

The slowdown in fixed-asset investment growth was a result of a higher comparison base during the same period last year, said Zhu Jianfang, an analyst with CITIC Securities Co. Ltd.

Industrial output

China's industrial value-added output grew 17.8 percent in April, slightly lower than the 18.1-percent increase in March, said the NBS.

The figure was compared with a 7.3-percent growth in April last year, when the national economy was hit hard by the global financial crisis.

Industrial production was stable, expanding relatively quickly in the first four months, the NBS said. Industrial value-added output rose 19.1 percent from January to April.

Retail sales

China's retail sales rose 18.5 percent year on year to 1.15 trillion yuan ($168.52 billion) in April, said the NBS. The figure was 3.7 percentage points higher than the same period last year and 0.5 percentage points higher than that in March.

In the first four months, retail sales reached 4.79 trillion yuan ($701.32 million), up 18.1 percent, 0.2 percentage points faster than the first quarter of this year.

Fiscal revenue

China's fiscal revenue in April rose 34.4 percent year on year to 792.6 billion yuan ($116.03 billion), said the Ministry of Finance. Fiscal revenue from January to April totaled 2.76 trillion yuan ($404.1 billion), up 34.1 percent.

Banking Competition

Foreign banks operating in China now see their Chinese competitors as their biggest challenge, said PricewaterhouseCoopers (PwC) in a report based on a poll of 42 foreign banks.

The foreign banks now see their domestic counterparts as formidable competitors. With their extensive branch networks and rising service expertise, Chinese lenders are much better placed to fend off competition from foreign banks, said Raymond Yung, Financial Services Leader for PwC China.

In areas such as wealth management, bank cards and Internet banking, domestic banks are continually "lifting their games," forcing foreign banks to compete based on a superior level of service, he said.

Despite the challenge, foreign banks continue to stake their futures in China. "They have been working hard in the last year to expand their reach across China. Many are now opting for local incorporation, and those who have are opening new branches," said William Yung, Financial Services Advisory Partner of PwC China.

Inorganic growth is also an area of focus, with the banks looking to make investments in areas such as asset management, private equity firms and trust and securities companies, he said.

The survey also revealed foreign banks expected a 10-20 percent increase of annual revenue in 2010.