News Briefs

China’s central bank restates relatively easy monetary policy based on new changes

China’s central bank reiterated on June 6 that it would continue to implement the relatively easy monetary policy according to changing situations in a bid to facilitate the ongoing development mode transformation, as well as reinforce the country’s sound and relatively fast economic growth.

The national economy is set to remain stable while seeing a relatively quick expansion this year, in general. However, the foundation of the recovery is not solid, the People’s Bank of China said in a report focusing on China’s regional financial operation.

Further, the report stated that China still needed to improve its ability to be innovative while also continuing to stimulate consumer spending as well as optimizing the country’s economic structure amid tough emission cutting targets.

Additionally, the report noted that the potential fiscal risk should not be overlooked. Many uncertainties, including the expanding European sovereign debt crisis, trade frictions, and the stimulus exit, would have a significant impact on China’s economy.

The central bank also encouraged the nation’s financial institutions to lend to companies in the new energy sector, small enterprises and job-promotion businesses, while asking them to avoid industries with high energy consumption and emissions as well as those with overcapacity.

Vanke: No plan to reduce prices

China Vanke Corporation says it has no plans to offer any large scale house price cuts, refuting growing rumors it is considering nationwide reductions this June.

In a statement made on June 6, Vanke denied reports of a cut in prices. The company says it will strive to meet the needs of its customers while matching market trends. But a look at the prices of homes that Vanke has for sale shows it’s clear the company has stepped up promotions.

A Vanke salesman said, “We have various discount measures. But we do not have any price cuts. If you pay a lump sum you’ll get a 100 thousand yuan (USD 14.7 thousand) discount.”

In one of Vanke’s most popular developments in Shenzhen, average prices have hit 20 thousand yuan (USD 25.4 thousand) per square meter. And more than 90 percent of the homes have sold. Prices this year have almost doubled compared with the same period last year.

A Shenzhen resident said: “I just want to wait and see. I believe house prices will fall one day.”

With people adopting a wait-and-see attitude, figures from the Shenzhen Bureau of Land and Resources show that the number of homes sold in May fell by nearly 60 per cent year on year to 1,371. The price, however, still remains solid at more than 20 thousand yuan (USD 25.4 thousand) per square meter, little changed from April.

China to strengthen monitoring of cross-border capital flows: FX regulator

China’s foreign exchange regulator said on June 10 that it will strengthen monitoring of cross-border capital flows to reduce risk.

The regulator will keep a close watch on the economic and financial situation home and abroad this year, the State Administration of Foreign Exchange (SAFE) said in its annual report on management of foreign exchange posted on its website.

It will also enhance its monitoring of abnormal cross-border capital flows by cracking down on illegal private banks and internet-based speculation in foreign exchange.

The SAFE will maintain a prudent approach to managing foreign currency reserves and will continue to improve its diversification strategy.

China’s balance of payments continue to expand, albeit slowly, despite the impact of the global financial crisis.

At the end of 2009, China’s foreign exchange reserves hit 2.4 trillion US dollars, a 453 billion US dollar increase from the end of 2008.

China had gold reserves of 1,054 tonnes at the end of last year, the fifth largest in the world.

Although gold has commodity and monetary properties, the global gold market is relatively small and illiquid, the report noted, adding that because of its volatile price and high cost of holding and trading, gold has limited utility in asset allocation.

Energy usage set to tighten to curb excess

Authorities will restrict energy supply in areas with excessive increases in energy usage and high energy-consuming industries, said a high-ranking official with the National Development and Reform Commission (NDRC), the country’s top economic planning body.

The practice of uncapped energy supply and the uncontrolled use of energy will change with the new moves, Xie Zhenhua, deputy minister of the NDRC, said in a statement published by the People’s Daily on June 16.

Starting from June 1, the NDRC has ordered enterprises using high levels of energy to be excluded from enjoying discounted electricity rates.

The central economic planner will also launch nationwide inspections to enforce the new moves, the statement said.

Such enterprises will also be required to limit or stop production, it said.

The country’s goal of curtailing its energy usage and cutting carbon emissions has met with difficulties as a pickup in the demand for energy-guzzling products pushed up the need for power.

Preliminary estimates showed that the energy use for every unit of gross domestic product, a measurement of China’s energy consumption, rose in the first quarter by 3.2 percent from a year earlier, Xie said.

Last year, the country’s energy consumption fell 2.2 percent, failing to meet an annual target of 4 percent.

China plans to cut its energy use by 20 percent below 2005 levels by the end of this year, according to a five-year energy-saving plan from 2006 through 2010.

The NDRC will also tighten its supervision of energy-saving practices in a number of key areas to meet the goal, Xie said. These key areas include large energy-consuming provinces such as Guangdong, Jiangsu and Shandong. In other provinces like Sichuan and Shanxi, energy consumption has grown so swiftly in the first five months of this year that supervision will also be boosted, he said.

Energy-saving moves in the past four years have fallen behind schedule, Xie said.

Only about half a year is left to make up for the lag, he said.

China’s farm produce, producer goods prices fall

Prices of farm produce and producer goods in China’s 36 large and medium-sized cities have dropped six weeks in a row, the Ministry of Commerce said on June 17, indicating easing inflationary pressure this June.

In the week ended June 13, farm produce prices dropped 0.4 percent in those cities from a week earlier while producer goods prices slide 0.9 percent, said a statement posted on the ministry’s website.

Vegetable prices continued to fall till Jun14 with the wholesale prices of 18 kinds of vegetables tumbling 5 percent from a week earlier, the statement said.

Food prices account for about one third of the weighting in China’s consumer price index (CPI), a major gauge of inflation, and the falling farm produce prices will eases some inflationary pressure for the government.

China’s CPI accelerated to a 19-month high at 3.1 percent year on year in May, exceeding the 3-percent government target for the year.

The falling producer goods prices indicate that the producer price index (PPI), a major measure of inflation at the wholesale level, may drop in the months to come.

China’s PPI rose 7.1 percent year on year in May, up 0.3 percentage points from April’s 6.8 percent.

The National Development and Reform Commission (NDRC), China’s central economic planner, projected last week that the CPI in June would drop from May but still go up mildly year on year due to the low comparing basis last year.

The NDRC expected the CPI to grow 2.6 percent in the first half of 2010 over one year ago.