China Consumer Price Rise Picks up Pace

(아주경제 신기림 기자) China said Tuesday that consumer prices and bank lending accelerated in April, fuelling fears the economy may overheat and building pressure on Beijing to hike interest rates and let its currency rise.

Property prices also marked a double-digit rise for the third straight month, signalling measures introduced by the government in recent weeks to curb inflation and rein in soaring prices were having little effect.

"Currently, prices are rising quite fast," a spokesman for the National Bureau of Statistics, Sheng Laiyun, told reporters, though he insisted those increases remained "relatively mild".

"In the near term, prices are still under quite significant upward pressure. Total demand is still on the rise and domestic liquidity is still abundant."

The consumer price index, the main gauge of inflation, rose a higher-than-expected 2.8 percent compared with April last year, outpacing the 2.4 percent jump in March, the NBS reported.

Sheng emphasised it was still possible for Beijing to achieve its own inflation target of three percent for the year, but analysts expressed concern that the rises were too fast.

New loans issued by Chinese banks hit 774 billion yuan (113.4 billion dollars) in April after falling to 510.7 billion yuan in March while property prices rose 12.8 percent year-on-year last month, official data showed.

Sheng warned that while China's economic recovery was now on a more solid footing, high unemployment in the United States and Europe's debt crisis would impact the country's exports this year.

Weaker demand for Chinese-made goods could prompt Beijing to delay a move on the value of the yuan, which has been effectively pegged at 6.8 to the dollar since mid-2008 to support exporters during the financial crisis.

A Chinese rate hike could encourage speculative funds to flow into the country to take advantage of the relatively higher yield, said Ba Shusong of the cabinet's Development Research Centre, according to media reports.

Urban fixed asset investment, a measure of government spending on infrastructure and a key driver of China's economy, rose 26.1 percent in the January-April period to 4.67 trillion yuan, the NBS said.

Industrial output from the country's millions of factories and workshops rose 17.8 percent year-on-year in April, while retail sales were up 18.5 percent for the month to 1.15 trillion yuan.

AJP