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China’s April Inflation Accelerates, Lending Surges (Update3)
11 May 2010, (Bloomberg)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZiryyuIpKwg&pos=2
May 11 (Bloomberg) -- China’s inflation accelerated, bank lending exceeded estimates and property prices jumped by a record, increasing pressure on the government to raise interest rates and let the currency appreciate.
Consumer prices rose 2.8 percent in April from a year earlier, the fastest pace in 18 months, and property prices jumped 12.8 percent, the statistics bureau said in statements today. New lending of 774 billion yuan ($113 billion), announced by the central bank, was more than any of 24 economists forecast.
Asian stocks fell, with the local benchmark index entering into a bear market, and oil and copper slumped on concern the government will move to cool the fastest-growing major economy. China should focus on preventing excessive increases in asset prices and liquidity after Europe’s almost $1 trillion loan package reduced the risk of another global slump, central bank adviser Li Daokui said yesterday.
“Price pressures have been building throughout the economy, strengthening the case for higher interest rates and a stronger yuan,” said Brian Jackson, a Hong Kong-based strategist at Royal Bank of Canada. “China is at risk of overheating, with spot fires breaking out in various parts of the economy.”
Stocks Slump
The MSCI Asia Pacific Index reversed a gain of as much as 0.7 percent to trade 1 percent lower at 118.91 as of 4:02 p.m. in Hong Kong. The Shanghai Composite Index fell 1.9 percent to close at 2,647.44, the lowest in almost a year. It has slid 21 percent since November, a sign analysts say is a bear market.
Copper futures on the London Metal Exchange fell to $7,003.50 a metric ton and crude oil decreased 0.9 percent to $76.15 a barrel in New York, paring an earlier 0.8 percent gain.
Non-deliverable yuan forwards rose 0.1 percent, indicating that the government will scrap a peg to the dollar and let the currency gain 2.3 percent in the next year.
The increase in consumer prices compared with 2.4 percent in March and the 2.7 percent median estimate of 30 economists surveyed by Bloomberg News. Producer prices jumped 6.8 percent, also topping estimates, today’s release from the statistics bureau showed.
The jump in property prices in 70 cities was the biggest since data began in 2005, defying a government crackdown on speculation that intensified last month.
Price Pressure
Statistics bureau spokesman Sheng Laiyun said that while April’s inflation was “mild” and not broad-based -- largely reflecting food and residential-related costs including rents - - the nation faces significant pressure for bigger price gains. Causes include liquidity, commodity costs and a low comparative base last year, he added.
Europe’s debt crisis may spread even after the rescue plan unveiled yesterday, which could lead to “positive and negative” effects by restricting demand for exports while damping commodity prices, Sheng said.
China’s government aims to contain full-year inflation at 3 percent and avert property bubbles after record credit growth drove an economic rebound. Investors are concerned stimulus withdrawal and a slowdown in construction could choke off growth after an 11.9 percent expansion in the first quarter.
Retail sales growth accelerated to 18.5 percent in April from a year earlier as prices rose. Chen Xiao, the chairman of Gome Electrical Appliances Holdings Ltd., the nation’s largest electronics retailer by stores, said yesterday that sales are “strong,” bolstered by government subsidies for purchases.
Producer Prices Soar
The gain in producer prices was the biggest in 19 months and exceeded economists’ 6.5 percent median estimate. In March the costs of goods as they leave the factory rose by 5.9 percent.
Not all of today’s indicators pointed up.
Industrial production rose 17.8 percent in April from a year earlier, below economists’ estimates and down from 18.1 percent in March. M2, the broadest measure of money supply, grew 21.5 percent, slowing from 22.5 percent.
Urban fixed-asset investment climbed 26.1 percent in the first four months from the same period in 2009, easing from 26.4 percent in the first quarter.
UBS AG economist Wang Tao said loans are typically higher at the start of each quarter and the latest figure doesn’t put the government’s target of limiting lending to 7.5 trillion yuan this year in jeopardy. Economists’ median estimate for April was 585 billion yuan and the previous month’s lending was 510.7 billion yuan.
Economic Growth
China International Capital Corp. yesterday cut its estimate for China’s economic growth this year to 9.5 percent from 10.5 percent, citing property tightening measures and overseas “uncertainties.” Adjustments to interest rates and currency policy may be delayed, the investment bank said.
Developers Guangzhou R&F Properties Co. and China Overseas Land & Investment Ltd. are reporting slowing sales as the real- estate crackdown intensifies. Besides tightening rules for second and third-home purchases, China has increased banks’ reserve requirements three times this year, withdrawing cash from the financial system.
Still, policy makers have left benchmark interest rates and the yuan’s peg to the dollar unchanged.
“The double-dip risk in the world economy is likely to be reduced to a minimum,” Li, the policy adviser, said in an interview in Beijing, expressing his personal view of the European aid plan. “China’s growth rate is not a problem this year, and the main policy focus should be on preventing excessive gains in asset prices and liquidity.”
--Kevin Hamlin, Li Yanping, Sophie Leung, Jay Wang, Chia-Peck Wong. Editors: Paul Panckhurst, Russell Ward
To contact the Bloomberg News staff on this story: Kevin Hamlin in Beijing on khamlin@bloomberg.net
China’s April Inflation Accelerates, Lending Surges 11 May 2010, (Bloomberg) http://tinyurl.com/2wxvedk
11 May 2010, (Bloomberg)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZiryyuIpKwg&pos=2
May 11 (Bloomberg) -- China’s inflation accelerated, bank lending exceeded estimates and property prices jumped by a record, increasing pressure on the government to raise interest rates and let the currency appreciate.
Consumer prices rose 2.8 percent in April from a year earlier, the fastest pace in 18 months, and property prices jumped 12.8 percent, the statistics bureau said in statements today. New lending of 774 billion yuan ($113 billion), announced by the central bank, was more than any of 24 economists forecast.
Asian stocks fell, with the local benchmark index entering into a bear market, and oil and copper slumped on concern the government will move to cool the fastest-growing major economy. China should focus on preventing excessive increases in asset prices and liquidity after Europe’s almost $1 trillion loan package reduced the risk of another global slump, central bank adviser Li Daokui said yesterday.
“Price pressures have been building throughout the economy, strengthening the case for higher interest rates and a stronger yuan,” said Brian Jackson, a Hong Kong-based strategist at Royal Bank of Canada. “China is at risk of overheating, with spot fires breaking out in various parts of the economy.”
Stocks Slump
The MSCI Asia Pacific Index reversed a gain of as much as 0.7 percent to trade 1 percent lower at 118.91 as of 4:02 p.m. in Hong Kong. The Shanghai Composite Index fell 1.9 percent to close at 2,647.44, the lowest in almost a year. It has slid 21 percent since November, a sign analysts say is a bear market.
Copper futures on the London Metal Exchange fell to $7,003.50 a metric ton and crude oil decreased 0.9 percent to $76.15 a barrel in New York, paring an earlier 0.8 percent gain.
Non-deliverable yuan forwards rose 0.1 percent, indicating that the government will scrap a peg to the dollar and let the currency gain 2.3 percent in the next year.
The increase in consumer prices compared with 2.4 percent in March and the 2.7 percent median estimate of 30 economists surveyed by Bloomberg News. Producer prices jumped 6.8 percent, also topping estimates, today’s release from the statistics bureau showed.
The jump in property prices in 70 cities was the biggest since data began in 2005, defying a government crackdown on speculation that intensified last month.
Price Pressure
Statistics bureau spokesman Sheng Laiyun said that while April’s inflation was “mild” and not broad-based -- largely reflecting food and residential-related costs including rents - - the nation faces significant pressure for bigger price gains. Causes include liquidity, commodity costs and a low comparative base last year, he added.
Europe’s debt crisis may spread even after the rescue plan unveiled yesterday, which could lead to “positive and negative” effects by restricting demand for exports while damping commodity prices, Sheng said.
China’s government aims to contain full-year inflation at 3 percent and avert property bubbles after record credit growth drove an economic rebound. Investors are concerned stimulus withdrawal and a slowdown in construction could choke off growth after an 11.9 percent expansion in the first quarter.
Retail sales growth accelerated to 18.5 percent in April from a year earlier as prices rose. Chen Xiao, the chairman of Gome Electrical Appliances Holdings Ltd., the nation’s largest electronics retailer by stores, said yesterday that sales are “strong,” bolstered by government subsidies for purchases.
Producer Prices Soar
The gain in producer prices was the biggest in 19 months and exceeded economists’ 6.5 percent median estimate. In March the costs of goods as they leave the factory rose by 5.9 percent.
Not all of today’s indicators pointed up.
Industrial production rose 17.8 percent in April from a year earlier, below economists’ estimates and down from 18.1 percent in March. M2, the broadest measure of money supply, grew 21.5 percent, slowing from 22.5 percent.
Urban fixed-asset investment climbed 26.1 percent in the first four months from the same period in 2009, easing from 26.4 percent in the first quarter.
UBS AG economist Wang Tao said loans are typically higher at the start of each quarter and the latest figure doesn’t put the government’s target of limiting lending to 7.5 trillion yuan this year in jeopardy. Economists’ median estimate for April was 585 billion yuan and the previous month’s lending was 510.7 billion yuan.
Economic Growth
China International Capital Corp. yesterday cut its estimate for China’s economic growth this year to 9.5 percent from 10.5 percent, citing property tightening measures and overseas “uncertainties.” Adjustments to interest rates and currency policy may be delayed, the investment bank said.
Developers Guangzhou R&F Properties Co. and China Overseas Land & Investment Ltd. are reporting slowing sales as the real- estate crackdown intensifies. Besides tightening rules for second and third-home purchases, China has increased banks’ reserve requirements three times this year, withdrawing cash from the financial system.
Still, policy makers have left benchmark interest rates and the yuan’s peg to the dollar unchanged.
“The double-dip risk in the world economy is likely to be reduced to a minimum,” Li, the policy adviser, said in an interview in Beijing, expressing his personal view of the European aid plan. “China’s growth rate is not a problem this year, and the main policy focus should be on preventing excessive gains in asset prices and liquidity.”
--Kevin Hamlin, Li Yanping, Sophie Leung, Jay Wang, Chia-Peck Wong. Editors: Paul Panckhurst, Russell Ward
To contact the Bloomberg News staff on this story: Kevin Hamlin in Beijing on khamlin@bloomberg.net
China’s April Inflation Accelerates, Lending Surges 11 May 2010, (Bloomberg) http://tinyurl.com/2wxvedk
- Gold 05-11 Daily FX -
China inflation rises as housing, food costs jump
11 May 2010, by Joe McDonald (AP)
http://www.google.com/hostednews/ap/article/ALeqM5hjXwS0tCNo41V9ZCAWxRg4iHAdcwD9FKHHMG1
– 7 hours ago - BEIJING — China's inflation accelerated in April, triggering a selloff in Chinese stocks Tuesday on fears of overheating and a possible credit clampdown by Beijing that might slow the country's economic recovery.
April consumer prices rose 2.8 percent from a year earlier, below Beijing's full-year target of 3 percent but up 0.4 percentage points from March, the National Bureau of Statistics said. Food prices jumped 5.9 percent, up from March's 5.2 percent rate.
"Growth in the consumer price index is still mild compared with our economic recovery and inflation in other countries," said a bureau spokesman, Sheng Laiyun. "But we are facing big inflation pressures in the short term."
Foreign companies and investors are watching Chinese inflation because any moves to cool prices might slow stimulus-fueled economic growth that surged to 11.9 percent in the first quarter. That could hurt the global recovery if it weakens demand for foreign iron ore and other imports.
Economists said inflation is still relatively low and Beijing was unlikely to react with an immediate rate hike at a time when the global outlook still is uncertain amid the European debt crisis.
"Overall, we don't see this as threatening yet for the economy," said Standard Chartered economist Jinny Yan. "What they will do is observe external markets for a while longer before deciding what to do."
But the data spooked investors and China's main stock index tumbled 1.9 percent to close at its lowest level in 11 months.
"Investors worry there is a chance of the economy overheating, and that might trigger more government policy tightening," said Huang Xiangbin, an analyst for Cinda Securities in Beijing.
The government worries about a surge in housing and other asset prices and is trying to use lending curbs to prevent a dangerous bubble while avoiding an across-the-board rate hike that might slow growth.
Housing prices in 70 Chinese cities jumped 12.8 percent in April despite the controls, the statistics bureau said.
Bank lending rose to 774 billion yuan ($113 billion), up from March's 510.7 billion yuan ($75 billion), the central bank announced.
Wholesale prices climbed 6.8 percent in April from a year earlier, a 0.9 percent increase over March's rise. That can lead to a rise in consumer prices down the line as retailers pass on higher costs.
Inflation was driven by cold weather that hurt the spring harvest and high prices for fuel and imported commodities, said Sheng, the statistics bureau spokesman. He said the biggest rises in April food costs were 14.9 percent for vegetables and 16.4 percent for fruit.
Other data Tuesday showed China's economic recovery still on track.
April retail sales rose 18.5 percent from a year earlier, up 0.5 percent from March's growth rate, while industrial output increased by 18.8 percent. Investment in factories and other fixed assets rose 26.1 percent in the January-to-April period over a year earlier.
"High growth and low inflation in the first half of the year looks set to segue rapidly into lower growth and higher inflation in the second half," said Tom Orlik, an analyst in Beijing for Stone & McCarthy Research Associates, in a report. "But there is little in today's data release to force a change in the government's policy agenda."
Associated Press researcher Bonnie Cao contributed to this report.
On the Net:
* China National Bureau of Statistics (in Chinese): http://www.stats.gov.cn
China inflation rises as housing, food costs jump 11 May 2010 (AP) http://tinyurl.com/329dqo3
11 May 2010, by Joe McDonald (AP)
http://www.google.com/hostednews/ap/article/ALeqM5hjXwS0tCNo41V9ZCAWxRg4iHAdcwD9FKHHMG1
– 7 hours ago - BEIJING — China's inflation accelerated in April, triggering a selloff in Chinese stocks Tuesday on fears of overheating and a possible credit clampdown by Beijing that might slow the country's economic recovery.
April consumer prices rose 2.8 percent from a year earlier, below Beijing's full-year target of 3 percent but up 0.4 percentage points from March, the National Bureau of Statistics said. Food prices jumped 5.9 percent, up from March's 5.2 percent rate.
"Growth in the consumer price index is still mild compared with our economic recovery and inflation in other countries," said a bureau spokesman, Sheng Laiyun. "But we are facing big inflation pressures in the short term."
Foreign companies and investors are watching Chinese inflation because any moves to cool prices might slow stimulus-fueled economic growth that surged to 11.9 percent in the first quarter. That could hurt the global recovery if it weakens demand for foreign iron ore and other imports.
Economists said inflation is still relatively low and Beijing was unlikely to react with an immediate rate hike at a time when the global outlook still is uncertain amid the European debt crisis.
"Overall, we don't see this as threatening yet for the economy," said Standard Chartered economist Jinny Yan. "What they will do is observe external markets for a while longer before deciding what to do."
But the data spooked investors and China's main stock index tumbled 1.9 percent to close at its lowest level in 11 months.
"Investors worry there is a chance of the economy overheating, and that might trigger more government policy tightening," said Huang Xiangbin, an analyst for Cinda Securities in Beijing.
The government worries about a surge in housing and other asset prices and is trying to use lending curbs to prevent a dangerous bubble while avoiding an across-the-board rate hike that might slow growth.
Housing prices in 70 Chinese cities jumped 12.8 percent in April despite the controls, the statistics bureau said.
Bank lending rose to 774 billion yuan ($113 billion), up from March's 510.7 billion yuan ($75 billion), the central bank announced.
Wholesale prices climbed 6.8 percent in April from a year earlier, a 0.9 percent increase over March's rise. That can lead to a rise in consumer prices down the line as retailers pass on higher costs.
Inflation was driven by cold weather that hurt the spring harvest and high prices for fuel and imported commodities, said Sheng, the statistics bureau spokesman. He said the biggest rises in April food costs were 14.9 percent for vegetables and 16.4 percent for fruit.
Other data Tuesday showed China's economic recovery still on track.
April retail sales rose 18.5 percent from a year earlier, up 0.5 percent from March's growth rate, while industrial output increased by 18.8 percent. Investment in factories and other fixed assets rose 26.1 percent in the January-to-April period over a year earlier.
"High growth and low inflation in the first half of the year looks set to segue rapidly into lower growth and higher inflation in the second half," said Tom Orlik, an analyst in Beijing for Stone & McCarthy Research Associates, in a report. "But there is little in today's data release to force a change in the government's policy agenda."
Associated Press researcher Bonnie Cao contributed to this report.
On the Net:
* China National Bureau of Statistics (in Chinese): http://www.stats.gov.cn
China inflation rises as housing, food costs jump 11 May 2010 (AP) http://tinyurl.com/329dqo3
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