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UPDATED: May 13, 2011 NO. 20 MAY 19, 2011


POWER SHORTAGE: Workers monitor power generating units at Hunan Valin Xiangtan Iron and Steel Co. Ltd. The State Grid estimates that Hunan Province will lack around 4 million kw of electricity a day this summer due to rising demand for power (HAN XILE)

Numbers of the Week

$36.86 billion

The 109th Canton Fair, which closed on May 6, witnessed export deals worth $36.86 billion, up 5.8 percent from the previous fair held in September 2010, said the organizing committee.

94.43 billion yuan

Sales revenues under the national program to subsidize rural purchases of home appliances totaled 94.43 billion

yuan ($14.3 billion) in the first four months, surging 128 percent from the previous year, said the Ministry of Commerce.



Economic data for April have been released. Inflation jitters seem to be easing a little, but risks still loom large. On the trade front, exporters recoup their strength, but imports have lost some steam in part due to waning domestic demands. Investment and consumption maintain momentum, both growing at double-digit growth rates. Internet giant Tencent buys into movie maker Huayi, which is expected to benefit both sides.

April Figures


The consumer price index (CPI), a barometer for inflation, rose 5.3 percent in April from a year ago, 0.1 percentage point lower than that of March, said the National Bureau of Statistics (NBS).

The index was driven up largely by food prices, which skyrocketed 11.5 percent year on year. Residential costs went up 6.1 percent.

The producer price index (PPI), a major measure of inflation at the wholesale level, went up 6.8 percent in April, but down from 7.3 percent the previous month.

"Government measures to control consumer prices are taking effect, though inflation pressures linger," said NBS spokesman Sheng Laiyun.

"Imported inflation remains a headache as global commodities prices creep up," he said. "Meanwhile, domestic costs inflation takes hold due to increased prices of labor and raw materials."

Price pressures are still uncomfortably strong, but there are some signs in the data that policy measures put in place over the last six months are having an impact, said Brian Jackson, economist with Royal Bank of Scotland in Hong Kong.

Jackson said inflation remained high enough to warrant two more increases by the central bank in interest rates and further yuan appreciation against the U.S. dollar.

Foreign trade

China's foreign trade continued to improve in April, though imports were moderate.

In April, foreign trade totaled $300 billion, soaring 25.9 percent from a year ago, said the General Administration of Customs. Of this total, exports edged up 29.9 percent year on year to $155.7 billion, while imports totaled $144.3 billion, up 21.8 percent, slowing from 27.3 percent in March. The April trade surplus came in at $11.43 billion, reversing a trade deficit of $1.02 billion in the January-to-March period.

China's export growth is "still quite robust," spurred by Japanese imports of consumer staples after the earthquake, said a report by the Bank of America Merrill Lynch.

"The slowing import growth might worry some investors who are concerned about an economic hard landing in China," said Ting Lu, an economist at the bank. "China's export growth is definitely positive, which displays strong resilience under the headwinds of rising labor costs, rising interest rates, appreciation of the yuan and surging raw material prices."

Zuo Xiaolei, chief economist with the China Galaxy Securities Co. Ltd. believed a slack in imports was in part because of a high comparison base in the same period last year.

It also reflected waning domestic demands as the broader economy loses some momentum, he said.

For the entire year, China will see its trade surplus shrink to around $120 billion, compared with $183.1 billion in 2010, said Peng Wensheng, chief economist at the China International Capital Corp. Ltd.

Money supply

The broad money supply (M2), which covers cash in circulation and all deposits, increased 15.3 percent from a year ago to 75.73 trillion yuan ($11.7 trillion) by the end of April, said the central bank.

Bank lending

New loans denominated in the yuan totaled 739.6 billion yuan ($113.8 billion) in April, compared with 679.4 billion yuan ($103.7 billion) in March, said the central bank.

The April figure brought the amount in the first four months to nearly 2.98 trillion yuan ($457.06 billion), a decrease of more than 390 billion yuan ($58.82 billion) from the same period last year.

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