China Watch Blog

China Watch Blog reports that India’s inflation unexpectedly accelerated in April to over 7% as food bills soared, data showed on Monday, diminishing chances of swift interest rate cuts to boost a stumbling economy.

The closely watched Wholesale Price Index rose to 7.23% in April from the same month a year ago with food prices climbing more than 10 percent. Inflation stood at 6.89% in March.

The data was the latest grim reminder that Asia’s third-largest economy is facing trouble after figures last week showed industrial output shrank by a surprise 3.5% in March due to weak domestic demand and falling exports.

The inflation number, which far outpaced market expectations of a 6.7% rise, “makes for extremely gloomy reading,” said Credit Suisse economist Robert Prior-Wandesforde.

“India’s growth-inflation mix is not exactly looking favorable right now.”

China Watch Blog has learnt that newly released economic indicators show that China’s economy continued to slow in April, raising expectations that the government will resort to greater policy easing to help stimulate the GDP.

Quickly cooling industrial production and fixed-asset investment, together with disappointing trade figures, have overtaken inflation as the key concern for Chinese policymakers, the People’s Daily reported.

This is driving Beijing to raise concerns about potential downside risks in the coming months, analysts said.

“The pace of economic growth in April may slow to its lowest ebb this year, mainly dragged down by weak exports and the slumping real estate market,” said Liu Yuanchun, deputy head with the economics school of Renmin University of China in Beijing.

In April, China’s consumer price index, a main gauge of inflation, eased to 3.4 percent year-on-year from 3.6 percent in March, according to data released by the National Bureau of Statistics on Friday.

Food prices increased 7 percent last month from a year earlier, compared with 7.5 percent in March, as falling pork and fruit prices offset rising vegetable prices.

A research report from the Bank of Communications forecast that the years’ average CPI may decline to 3.3 percent from 5.4 percent in 2011.

Inflationary pressure may ease in the first three quarters, while rebounding slightly in the last quarter of this year, the report said.

China Watch Blog has learnt that the Hong Kong economy slowed further in the first quarter of 2012, with real GDP posting a slight year-on-year growth of 0.4%, after a 3.0% expansion in the fourth quarter of 2011.

The weak performance in the first quarter was mainly dragged by the lull in exports amid a difficult external environment. The domestic sector nevertheless continued to display strength and help cushion the overall economic performance. On a seasonally adjusted quarter-to-quarter comparison, real GDP also grew slightly by 0.4% in the first quarter, similar to that in the preceding quarter.

* Total exports of goods dipped by 5.7% in real terms in the first quarter of 2012 over a year earlier. Although this was partly exaggerated by the exceptionally high base of comparison a year earlier, widespread weaknesses were seen across exports to many regions, including Asia. Exports of services likewise moderated but still grew modestly by 3.6% year-on-year in real terms in the first quarter of 2012, thanks to the strong cushion rendered by thriving inbound tourism.

* On the domestic front, private consumption expenditure held up well on the back of the much improved income conditions, with a further brisk growth of 5.6% year-on-year in real terms in the first quarter. Investment spending also remained strong with a further surge of 12.2% over a year earlier, buttressed by active machinery and equipment acquisition and hectic public sector infrastructure works.

China Watch Blog has learnt that a survey, conducted by TNS, shows that 2.8 million people in Hong Kong participated in this year’s “lights off” event, marking Earth Hour’s continued success in conveying the importance of sustainable living to the public.

This is the fourth year that WWF has organised Earth Hour in Hong Kong. This year, WWF called on individuals to not only turn off their lights for one hour, but to set their energy saving targets and work towards living sustainably.

According to the survey, a majority of participants showed commitment to sustainable living beyond the hour. In fact, all Earth Hour participants pledged to take future action toward a more sustainable living, with 77% saying they would turn off lights when not in use, 64% would replace old light bulbs and 61% would turn off appliances when not being used (please refer to Appendix for full survey results). In addition, two thirds of the survey respondents said Earth Hour influenced them into setting an energy saving target and committing to sustainable living.

Dr William Yu, WWF-Hong Kong’s Head of Climate Programme said: “Earth Hour is not about energy saving for one particular hour: it is about understanding that small changes in our everyday lives can collectively make an impact. The participation of over 2.8 million Hong Kong people in the lights-out event, and their commitment to go beyond the hour, is an incredibly encouraging message we are willing and ready to commit to sustainable living. WWF is taking this commitment one step further by asking the new government to set an energy saving target for Hong Kong as a whole.”

According to data provided by both CLP and HK Electric, electricity consumption in Hong Kong dropped by 4.27% during Earth Hour on Saturday 31 March 2012. This drop in electricity consumption is equivalent to saving 146 tonnes of carbon dioxide, which would require 6,348 trees to absorb in one year.

“We need related policies to help Hong Kong individuals and the business sector to reinforce their sustainable living commitment. WWF is encouraging the upcoming government to release a holistic and comprehensive climate and energy strategy, which includes implementing greater energy efficiency measures and setting emissions target for the city,” added Dr Yu. “The UK was the first nation to pass a binding Climate Change Act. Mexico is another excellent example as the Mexican Senate has recently passed its first comprehensive climate change law, which commits the country to cut its emission by 50% by 2050 with international support.”

The Earth Hour online survey was conducted by TNS after Earth Hour on 31 March 2012, and interviewed 1,000 people aged 18 to 64 across Hong Kong. 57% of the respondents who were aware of Earth Hour said they participated in Earth Hour 2012. About 29% said they had considered participating in Earth Hour but they were not able to make it due to various reasons, such as not being at home.

This year saw impressive participation of Hong Kong people in the annual lights-out event. Hong Kong joined hundreds of millions of people in over 6,500 cities and towns across 150 countries and regions in committing to a sustainable future. In Hong Kong, over 3,300 companies and buildings, all universities and over 340 secondary and primary schools pledged to join the global event.

To help Hong Kong people to go beyond the hour, WWF offers a range of activities and programmes, including “ I Will If You Will” Celebrity Challenge, “ I Will If You Will” Energy Saving Challenge, Climateers programme and the Low-carbon Office Operation Programme (LOOP) to help the general public and commercial sector continue practising sustainable living every day.

Standard Chartered Hong Kong 150th Anniversary Community Foundation has also been the lead sponsor for three consecutive years and fully supported the various promotional activities of Earth Hour in Hong Kong.

China Watch Blog has learnt that Shanghai customs seized more than 55 tons of fake Jamila-brand seasonings on route to Africa at the city’s Yangshan Port.

Yangshan port

The compound condiments, worth US$102,000, had shabby packaging and claimed to be products from Anhui Qiangwang Flavoring Food Co Ltd, which owns the Jamila brand.

Customs officials suspected the goods were counterfeits after discovering impurities in them on March 21. They contacted the brand owner and confirmed these were fakes.

Jamila has enjoyed a good reputation in African and Southeast Asian markets for nine years with its popular chicken and shrimp bouillon cubes, condiments, and chicken powder.

China Watch Blog has learnt that China’s inflation may weaken in April, allowing more room for policy stimulus, but trade is likely to remain dim.

The Consumer Price Index, a main gauge of inflation, may rise 3.4 percent in April, Lu Zhengwei, chief economist at the Industrial Bank, said.

The Bank of Communications economist Tang Jianwei predicted a 3.3 percent increase, the Shanghai Daily reported.

The inflation rebounded more than expected to 3.6 percent in March from the 20-month low of 3.2 percent in February.

“Inflationary pressure is receding with lower global oil prices and cheaper pork,” Lu said. “This can ease worries of policymakers and allow a reserve requirement ratio cut possibly this month.”

The world’s second-largest economy still needs at least one reserve requirement ratio cut to boost liquidity and sustain growth, which showed some encouraging signs this month, analysts said.

China Watch Blog has learnt that Shanghai Customs has detained 10 people for allegedly cheating 42 million yuan (US$6.66 million) in export tax rebate by declaring electronic exports at artificially high prices.

Officials said the 10 suspects, all Chinese, have exported electronic goods including capacitors, diodes and massage sticks to Hong Kong through six trading companies since 2009, and the case involving goods valued at 288 million yuan in total is the biggest of its kind in Shanghai.

They purchased value-added tax invoices at a cost about 4.5 to 5.5 percent of an invoice face value and declared export items at prices 10 times higher than their market prices.

During investigations, custom officials found the gang exchanged foreign currencies through underground banks and deposited the money in a Hong Kong bank account. Every time the goods arrived, they used the Hong Kong account to pay the trading companies and obtain export earnings verification forms to apply for tax rebates.

The gang also hired smugglers to bring exported goods back into mainland and export them again and again to defraud tax rebates totaling 42 million yuan from 2009 to January this year.

Shanghai police arrested the 10 suspects on March 29 and they could face jail terms from 10 years to life imprisonment, custom officials said.

China Watch Blog has learnt that China aims to make its Internet services accessible to more people in the coming years and bring its total number of Internet users to 800 million by 2015, according to a national development plan.

China Daily reported that the number, which accounts for around 57 percent of the total population, includes 200 million netizens in rural areas, according to an Internet development plan for the 2011-2015 period unveiled Friday by the Ministry of Information and Information Technology (MIIT).

The plan said revenues for the online service industry will grow at an annual rate of 25 percent during the period, helping to provide jobs for 2.3 million people by 2015.

Meanwhile, the transaction value of the country’s booming e-commerce businesses is expected to hit 18 trillion yuan in 2015, according to the plan.

The MIIT also announced Friday another development plan for the communications sector.

The plan says that by 2015, China’s telecommunication businesses will reap combined revenues of 1.5 trillion yuan, while the total number of 3G subscribers will exceed 450 million.

As of the end of last year, China’s online population totalled 513 million. More Chinese have been going online to voice their opinions and participate in public affairs in recent years.

China Watch Blog has learnt that China’s inflation growth rate is expected to ease in April from the previous month with the slowing of food price rises.

Xinhua cited a report released by the Bank of Communications to clients as saying that the consumer price index (CPI), a main gauge of inflation, is likely to increase 3.3 percent year-on-year in April, slightly down from March’s 3.6-percent growth.

The bank attributed the slowdown to slower food price rises and a smaller carryover effect from last year, which was 0.1 percentage points less than that of March.

Food prices, which account for one-third of the basket of goods used to calculate China’s CPI, will decline 0.5 to 1 percent in April from March, it said.

It also projected non-food prices to fall 1.6 percent month-on-month in April.

The National Bureau of Statistics is scheduled to release April’s economic data on May 11, which will include the CPI and figures for industrial production, retail sales and fixed asset investment.

The Chinese government aims to keep CPI growth around 4 percent for the year.

China Watch Blog has learnt that China’s search engine market size has hit 5.53 billion yuan ($877.8 million) in the first quarter of 2012.

Xinhua reported that the figure represents a 70.4 percent year-on-year increase, but a 4.7 percent decline compared to the last quarter of 2011, showed the figures from Analysys International, a Beijing-based tech and internet information provider.

Dong Xu, an analyst with the firm, was quoted as saying that the quarter-on-quarter decline to the traditional seasonality of Internet use.

Thanks to its good overall performance, however, the keyword section has attracted steady advertising budgets, Dong said.

Keyword advertising also meets the needs of brand marketing with advertisers, who are gradually recognizing its promotional value. Therefore, China’s search engine market will keep a stable development, he added.