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Economic expansion in China cools slightly in April | |
(about 1 hour later) | |
China's red-hot economy has cooled slightly, after the government stepped up efforts to fight inflation. | |
Headline inflation eased to 5.3% in April, down from a three-year high of 5.4% in March. | |
The government has identified rising prices, especially in food, fuel and housing, as a serious social and political problem. | The government has identified rising prices, especially in food, fuel and housing, as a serious social and political problem. |
Premier Wen Jiabao said in March that reining in prices was the government's "top priority" in 2011. | Premier Wen Jiabao said in March that reining in prices was the government's "top priority" in 2011. |
"Price pressures are still uncomfortably strong, but there are some signs in today's data that policy measures put in place over the last six months or so are having an impact," said Brian Jackson, a Hong Kong-based economist with the Royal Bank of Canada. | |
"In the meantime, though, inflation is too high and will keep the policy bias in favour of more action over the next few months." | |
Mr Jackson expects China's central bank to continue to raise borrowing costs, and to allow the yuan currency to strengthen further against the US dollar. | |
A stronger currency brings down the cost of imported items such as fuel and food. | |
Social unrest | |
Since October, Beijing has imposed a raft of measures to reduce food, fuel and housing costs. | |
But the tension caused by higher prices is growing. | |
In April, hundreds of drivers in Shanghai took part in three days of protests against rising fees and fuel prices. | |
The industrial action was a clear sign to Beijing that it must succeed in taming inflation. | |
Andrew Batson, research director at Dragonomics in Beijing, said he expected prices to come down in the coming months. | |
"The government's previously loose monetary policy was the fundamental driver behind price rises," he said. | |
"Now that Beijing is tightening, we believe inflation will fall." | |
In an attempt to slow price growth, China's central bank has already raised the cost of borrowing four times since October, and asked banks to hold more money instead of lending it out. | |
Besides the headline consumer price index, the National Bureau of Statistics said factory output rose by 13.4% last month, much less than what economists had forecast, and lower than the March figure of 14.8%. | |
Investment in fixed assets such as roads, buildings and factories also climbed, by 25.4% in April, slightly higher than expectations. |