So will China give the economy another rate rise for good measure after a small fall in inflation in April, but a rise in bank lending?
In fact a cautious summary of the data would be, China’s economy is slowing and at this stage there’s no sign of a hard landing as monetary policy is tightened.
The central bank has raised interest rates four times since October.
It has also raised banks’ reserve requirements seven times, locking up a record 20.5% of deposits for big banks that could otherwise be made to support loans.
But judging by the impact of yesterday’s reports and the nature of the falls, another rate rise will probably be put on hold for a while.
The news had little impact on Asian (and Australian markets) which rose.
But overnight sentiment changed and we saw a return of the gloom of last week.
Silver sank more than 8% to $US35.08, gold lost $US16 an ounce to $US1500, copper lost 3.3% to $US3.90 a pound and oil sank to under $US99 a barrel in New York, a loss of 5%, while wheat, corn and sugar also fell sharply.
The US dollar rose 1.5% again the euro, the Aussie dollar fell under 107 USc as a result and Wall Street fell more than 1%, much larger falls than in Europe where they were less than 1%.
So did China’s news do it? Probably not, but another fall in copper imports impacted that market.
A couple of other changes in China’s monthly data that tells us the economy is cooling: industrial production slowed noticeably, car sales fell for the first time in 27 months and producer prices showed a noticeable fall.
The slight easing in consumer prices to an annual rate of 5.3% in April, from 5.4% in March, wasn’t the real story.
Food prices remained elevated, up an annual 11.5% in April, and up from March’s 11% rate of growth and despite widespread official media reports of falling food prices in late April.
But producer prices wholesale inflation climbed an annual 6.8% in April, down half a percent from the 7.3% rate in March.
Retail sales were up 17.1% from April last year, but that was 0.3% down on the rate in March. But they were up 16.5% for the four months to April, 0.2% higher than the rate in the March quarter.
Industrial output was much weaker, rising 13.4% year-on-year in April, down from a 14.8% increase in March.
Steel, oil and cement production were up in April, but car output dipped 1.85%.
The fall to 1.55 million units in April was the first negative growth rate recorded in 27 months.
Domestic car makers manufactured 1.53 million vehicles last month, down 1.85% from April of last year.
The country’s car manufacturers association said that sales were up 5.95%, well under the double digit increases of a year ago.
And the nation’s output rose 5% to 6.43 million vehicles in the four months to April; also well down from double digital increases in 2010.
The Association said the annual growth rate of auto output and sales would be lower than expected due to the removal of incentives, rising fuel costs, the Japanese earthquake and tighter traffic restrictions.
The Association said the market share of Japanese cars fell 3% in April, with the impact of the tsunami the major reason as it restricted the supply of parts to plants in China.
Toyota reported a 23% drop in car production in China in April.
Urban fixed-asset investment expanded 25.4% in the January-through-April period, a touch weaker than in the year to March.
Chinese banks issued 739.6 billion Yuan ($US113.9 billion) in new loans in April, above forecasts of 725 billion Yuan.
Yuan loans outstanding at the end of April were 17.5% higher than the previous April, according to the central bank.
The fall in industrial production was blamed on power shortages which hit heavy industry in several sectors.
China continues to battle drought in several areas which is cutting hydro electric production.
And figures also released yesterday showed a rise in the value of property sales in China during the first four months of 13.3% year-on-year.
Sales of residential housing rose 11%, while office sales and sales of business properties rose 23.8% and 26.6%, respectively, according to figures released by the National Bureau of Statistics.
And finally in a sign of things to come, the car manufacturers association said China exported 225,400 autos during the first four months, up 56.72% from the same period of 2010.
With sales and demand slowing in China, we can expect more Chinese made cars top be landing here and in other markets in coming months.
