Mixed signals from mainland economy

Mixed signals from mainland economy
13-05-2009

China's factory output growth slowed in April, but the pace of retail sales growth surprisingly accelerated. "It is important not to attach too much importance to one particular data point and to recognise that any recovery in China is not going to proceed in a straight line," said Brian Jackson, an economist with Royal Bank of Canada in Hong Kong.

"Policy stimulus is having an impact on domestic demand, but weak external demand is still dragging down overall growth," he said. Growth in factory output slowed to 7.3 percent in the 12 months to April, below analysts' forecasts of a rise of 8.3 percent, which was also the reading in March.

The moderation was consistent with a 22.6 percent drop in China's exports last month and suggested factories may have jumped the gun in March by increaasing output and adding to inventories in expectation of orders that did not fully materialise. Zhu Baoliang, deputy director of economic forecasting at the State Information Centre, a government think-tank, called the rise of 7.3 percent "okay" and said it was no cause for concern.

"It means the manufacturing industry is still on the path of recovery. Industrial production is stabilising, but we may also see some short-term fluctuations due to inventory adjustments," he said.

Bank of America selling CCB stake

Bank of America selling CCB stake
13-05-2009

It's been widely reported that Bank of America is seeking buyers for part of its stake in China Construction Bank.

The American bank is trying to boost its capital by selling one third of its 16.7 percent stake, after the US regulators required the bank to fill a capital hole of US$34 billion last week.

Singapore's state-owned investment firm, Temasek, and a private equity fund, Hopu Investment Management, are said to be potential buyers.

China's inflation weakens further

China's inflation weakens further
11-05-2009

China's inflation weakened further in April, with the consumer price index falling 1.5 percent from a year ago, the government said.

Compared with a month earlier, the index, the main gauge of inflation, was down 0.2 percent, the National Bureau of Statistics said in a statement.

The continued decline in consumer prices comes as China struggles with the most serious economic slowdown in nearly two decades, brought about by the global financial crisis.

The World Bank has forecast that China's economy, the world's third-largest, will expand by 6.5 percent this year, the lowest rate of growth since 1990.

In March, consumer prices were down 1.2 percent from a year earlier, according to previously released data. In the first four months of the year, the consumer price index fell 0.8 percent from the same period in 2008, according to the bureau.

UK to boost economic ties with China

UK to boost economic ties with China
11-05-2009

British finance minister Alistair Darling has pledged to further strengthen ties between London and Beijing at a Britain-China economic summit.

In a comment piece in the Times newspaper he said the two countries had to do more to push forward an agreement reached at last month's G20 summit in London, promote ties between the two financial markets, enhance trade links and tie future growth to environmental sustainability.

"We must do more to seize the shared opportunities to learn, trade and invest," Chancellor of the Exchequer Darling wrote, ahead of the summit in London. "Thousands of jobs, now and in the future, depend on it."