SHOPPING SPREE: The Tianjin municipal commerce department said the 108 restaurants and shopping malls there racked up 2.21 billion yuan ($334.7 million) in sales during the Spring Festival holiday (February 2-8), up 20.5 percent over the festival period last year (YUE YUEWEI)
Numbers of the Week
404.5 billion yuan
During the Spring Festival holiday (February 2-8), retail sales of shopping malls and restaurants on the Chinese mainland totaled 404.5 billion yuan ($61.3 billion), marking a 19-percent increase over last year's festival period, said the Ministry of Commerce.
2.4 trillion yuan
The output value of China's forestry industry is expected to reach 2.4 trillion yuan ($364.7 billion) in 2011, compared to about 2 trillion yuan ($304 billion) last year, said the State Forestry Administration.
TO THE POINT: By ordering another interest rate hike, China attempts TO THE POINT: By ordering another interest rate hike, China attempts to combat runaway inflation. The manufacturing industry loses some steam as the PMI hits a five-month low in January 2011. The gold market is bursting with vitality as risk aversion comes to the fore amid inflationary fears. Chinese telecom equipment suppliers Huawei and ZTE reap juicy returns, with their 2010 revenues on a sharp rise. China's job markets are bound for a rosy outlook this year with hiring activities picking up.
By HU YUE
Raising Interest Rates
The People's Bank of China, the central bank, on February 9 raised interest rates for the first time in 2011, in order to tame inflation.
The one-year benchmark deposit rate rose from 2.75 percent to 3 percent, while the one-year benchmark lending rate grew by 25 percentage points, to 6.06 percent, said the central bank.
After a two-year lending spree, a flood of liquidity is sloshing around the Chinese economy, fueling inflationary jitters and housing bubbles. The consumer price index (CPI), a barometer of inflation, hit a 28-month high of 5.1 percent in November 2010, followed by 4.6 percent in December.
In response, policy-makers have been pushing all the buttons to rein in inflation. The government has pledged to take a prudent monetary stance this year, marking a switch from the moderately loose policy adopted to counter the financial crisis.
The interest rate increase was fully expected, given the strength of China's 2010 fourth-quarter GDP (9.8 percent), which allowed China to intensify its tightening efforts, said Qu Hongbin, HSBC's Chief Economist for China.
"Interest rate hikes are essential for anchoring inflationary expectations and narrowing the negative interest rate gap," he said.
"For the average consumer, people will feel that inflation is worse because you go buy food every day and food inflation is higher than 10 percent," said Wang Tao, China economist at UBS.
Lu Zhengwei, an analyst at the Industrial Bank Co. Ltd., believed consumer prices in the country still face upward pressures in the first half of 2011.
More policy moves, especially increases in the reserve requirement ratio, are in the pipeline to soak up excess liquidity, he said.
The Purchasing Managers Index (PMI), a barometer of manufacturing activities, reached 52.9 percent in January 2011, down 1 percentage point from December 2010, said the China Federation of Logistics and Purchasing (CFLP). This was the lowest reading in five months, and the second consecutive month in which the number dropped.
But, it still marked the 23rd straight month in which the index was above 50 percent. The PMI includes a package of indices to measure manufacturing sector performance. A reading above 50 percent indicates economic expansion.
"This indicates that the economic recovery trend is not yet clear, and we may see economic growth slow down a bit," said Zhang Liqun, a researcher at the Development Research Center of the State Council.
"The new export orders sub-index continued to fall while the input prices sub-index went on rising, which suggests that enterprises could face relatively huge difficulties of costs inflation and lackluster demands," he added.
But Bank of America Merrill Lynch economist Lu Ting said the data were heavily distorted by the holiday and there are "no big worries on growth."