Spending Fervor

Retail sales, an important indicator of China's market and consumer sentiment, have been growing at an increasing speed over the past year.

China's retail sales in May climbed 15.9 percent from a year earlier, the National Bureau of Statistics (NBS) said on June 13.

Retail sales, the major gauge of consumer spending, reached 715.8 billion yuan in May, 6.9 percent up from 667.3 billion yuan in April, said the NBS. Retail sales in urban areas rose 16.3 percent to 486.2 billion yuan while in rural areas it jumped 15 percent to reach 229.6 billion yuan.

The wholesale and retail sector rose 15.7 percent, while catering and hotel figures were up 18.7 percent.

Fewer JVs and More FDI

China approved fewer joint ventures but attracted more foreign direct investment (FDI) in the first five months of the year, indicating the country is still a popular destination of overseas capital, Yao Shenhong, spokesman with the Ministry of Commerce said on June 13.

A total of 15,072 joint ventures were approved by the ministry from January to May, down 3.75 percent year-on-year, bringing in $25.28 billion, up 9.87 percent from a year earlier, Yao said.

New Material for Ethanol

Non-staple crops in China like sorghum, batata and cassava will become the new sources for ethanol as China has decided to stop ethanol production from corn, said an official from the country's top economic policy-making agency.

Xiong Bilin, Deputy Director of the Industry Department of the National Development and Reform Commission, told a forum

in Beijing that the State Council has decided that ethanol fuel should be developed without occupying arable land, large-scale consumption of grain or damage to the

environment.

"The country will not approve new projects of food-based ethanol," Xiong said. "The current four plants engaged in making ethanol from corn are urged to switch to new sources."

National Standard for MP3 Players

China is expected to issue national standards for portable digital players by the end of 2007 after many were found to have defects, according to the Ministry of Information Industry.

The ministry recently announced that 22 of the 33 types of MP3 players it inspected in 2006 were defective. Many provided poor sound quality and had unsafe power adapters.

In 2006, about 100 million MP3 players were produced in China and half of them were exported, according to the ministry. China has around 1,000 MP3 player makers. "Many sacrifice quality to reduce costs to snatch a higher market share," said Han Jun, an official with the ministry's science and technology department.

Dampened Enthusiasm

for Deposits

Chinese people who used to stash their money in banks are taking it out to play the capital markets, leading to a decline in the country's household deposits for the second month in a row.

In May 2006, household deposits rose by 17 billion yuan. But this May they plunged by 278 billion yuan after a 167 billion yuan decline in April, according to figures released June 12 by the People's Bank of China, the central bank.

M1, a narrow measure of money supply that includes cash and demand deposits, surged by 19 percent to 13 trillion yuan at the end of May as households kept money on tap for investment in the capital market.

Compared with the

lucrative capital market, the comparatively low deposit interest rates give people

little incentive to put their money in banks, according to Tan Yaling, a researcher with the Bank of China.