China Watch Blog

China Watch Blog has learnt that the number of merger and acquisition deals in China grew for a second consecutive month in August by 6.4 percent from July to reach 282.

According to a China Venture report, the total investment of the deals dropped 28.83 percent from a month ago to 73.3 billion yuan (US$11.47 billion).

Of the 282 deals, 207 have been completed – the highest number so far this year. The firm also said 176 of these deals saw a combined investment of 55.8 billion yuan, up 10.6 percent from July, the Shanghai Daily reported.

Among the 207 cases, 189 deals took place between Chinese firms, 12 were sealed outside China by domestic firms buying overseas assets and six were secured by foreign investors in China, the report added.

The energy and mining sector saw the most M&As with 38, followed by 23 cases in IT and 22 among manufacturers.

China Watch Blog has learnt that the Mainland’s inflation growth finally slowed down in August, and analysts are saying that this raises hopes that policymakers may abstain from further monetary tightening measures.

The Consumer Price Index, a main gauge of inflation, expanded 6.2 percent from a year earlier last month – slightly below the 37-month high of 6.5 percent in July, the National Bureau of Statistics said.

Food costs, a major inflation driver, rose 13.4 percent year on year, down from July’s 14.8 percent and June’s 14.4 percent, the Shanghai Daily reported.

The Producer Price Index, a factory-gate measurement of inflation, swelled 7.3 percent on an annual basis in August, also easing from a rate of 7.5 percent a month earlier.

“The August data seem to confirm our view that ‘inflation peaked in July’ and we now expect no more interest rate increases in 2011,” said Chang Jian, an economist at Barclays Capital said.

“We think inflation will likely only come down gradually, and the month-on-month momentum in consumer prices is a key to watch for a shift in the central bank’s anti-inflation measures,” Chang said, adding there may be no loosening of monetary policy in the near term, but some “selective” or “targeted” easing measures are likely in the coming months.

China has raised the interest rates three times so far this year to tame inflation, together with six reserve requirement ratio hikes that demanded commercial banks to put aside more money as reserves.