| Numbers of the Week
1.19 trillion yuan
China's fiscal surplus stood at 1.19 trillion yuan ($174 billion) in the first half of this year, while total fiscal revenue surpassed 3.48 trillion yuan ($509 billion), a 33.27-percent jump from the year-earlier period.
10%
The government lowered the required downpayment on home purchases to 10 percent from the current 20-30 percent for citizens in the country's quake-hit areas, according to a joint directive issued on August 13 by the central bank and the other three financial regulators.
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TO THE POINT: Economic figures from July indicated that China's economy was running smoothly, although inflation pressure still hovered over the nation with producer prices soaring to a 12-year record high. Some analysts were concerned that increased producer prices could affect consumer prices. The country's exports in July were much better than expected, and the national consumption level grew as quickly as experts had predicted. Auto sales were lower in July month on month because of higher fuel costs and Beijing's temporary restrictions on vehicle operation during the Olympics.
By LIU YUNYUN |
Key Economic Figures in July
CPI up 6.3 percent
China's inflation showed no signs of dropping and remained at its current level because of higher prices for food and gasoline.
The consumer price index (CPI), a barometer for inflation at the retail level, grew 6.3 percent in July year on year. The year-on-year growth rate slowed compared with the CPI's 7.1-percent growth rate in June. But month-on-month growth accelerated 0.1 percentage point from June to July. Inflation pressure also gained momentum after dropping in May and June.
Food prices, which account for one third of the CPI basket and are considered a major trigger of this round of inflation, rose 14.4 percent in July. Among the food products whose prices rose last month were edible oil (30.8 percent), fish (18.3 percent) and meat (16 percent).
The CPI for non-food sectors rose 2.1 percent year on year versus 1.9 percent in June, mainly because the government increased prices for gasoline, diesel and electricity in late June.
High inflation pressure and a drop in home prices have presented a dilemma for the Central Government. At the beginning of the year, the government had vowed to rein in inflation by enforcing a stringent monetary policy. The central bank has raised the reserve requirement ratio five times this year to 17.5 percent.
Analysts say they are concerned that a post-Olympic economic slowdown could emerge, because of a potential crisis in the real estate market, whose growth rate was 7 percent in July year on year-its slowest growth in six months.
The central bank has ignored these problems and reinforced its efforts to freeze the amount of cash in circulation. When the CPI figure for July was released on August 12, the central bank issued 104 billion yuan ($15 billion) in notes and repos the same day.
PPI up 10.0 percent
China's producer price index (PPI), a main gauge of inflation at the wholesale level, soared 10 percent in July to a 12-year high compared with the same month last year. Prices for raw materials, fuel and power fueled the PPI surge.
In July, the producer prices of crude oil, ordinary medium rolled steel and crude coal rose 41.2 percent, 47.2 percent and 32.2 percent, respectively.
Many experts attributed the runaway PPI to big increases in the price of international raw materials.
"The distorted pricing mechanism of world resources is one of the triggers of the international commodity price surge and is also one factor leading to China's inflation," said Xu Xiaonian, a professor of economics and finance at China Europe International Business School, at a forum on mainland stock markets in Shenzhen on August 10.
Xu also said China was overly dependent on imported resource-related products such as crude oil and iron ore, and its high demand caused commodity prices to rise internationally.
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