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China annual inflation steady at 2.7% in July: govt
by Staff Writers
Beijing, China / China (AFP) Aug 09, 2013

China vehicle sales growth slows in July
Shanghai, China / China (AFP) Aug 09, 2013 - Growth in China's vehicle sales slowed to an annual 9.9 percent in July, an industry group said Friday, as the world's largest car market entered its low season.

Sales totalled 1.52 million last month, the China Association of Automobile Manufacturers (CAAM) said in a statement, a slowdown in growth from June's 11.2 percent improvement.

Sales for the first seven months totalled 12.30 million units, the group said, up 12.0 percent from a year earlier but lower than the 12.3 percent growth registered in the first half.

Automakers usually carry out equipment maintenance and send workers on holiday to avoid China's hottest weather in late July and early August, CAAM said in explanation of the slowdown.

Monthly passenger vehicles sales grew 10.5 percent year-on-year to 1.24 million units, the statement said, adding Chinese-brand sales increased 5.8 percent to 435,500 units to give them a 35.2 percent market share.

It was their lowest share of the market since the global financial crisis in 2008, the group said, adding their situation was "grim".

Among foreign brands, German carmakers had the largest share with 21.4 percent, followed by Japanese companies on 17.6 percent and US firms with 13.6 percent.

China became the world's largest auto market in 2009.

Consulting firm McKinsey forecasts the country's passenger car market to grow an average of eight percent annually through to 2020, when sales will reach 22 million.

Foreign automakers have announced plans to expand in China, where increasing wealth is giving consumers more money to spend.

US automaker General Motors announced in June it would invest $11 billion in China through 2016, as it broke ground on a plant to produce luxury Cadillacs.

And in May German auto giant Volkswagen broke ground on a new plant in the central city of Changsha, due for completion at the end of 2015, with an annual output capacity of about 300,000 vehicles.

Fall in China loans in July: central bank
Beijing (AFP) Aug 09, 2013 - Chinese banks granted fewer loans in July than the previous month, data released by the central bank showed Friday, in the aftermath of a liquidity crunch that rattled banks.

Banks extended 699.9 billion yuan ($114 billion) in new loans last month, the People's Bank of China (PBoC) said in a statement, down from 860.5 billion yuan in June.

But the July figure was still ahead of expectations, beating a forecast of 633 billion yuan by 14 economists polled by Dow Jones Newswires.

"We do see some negative impact of the June inter-bank liquidity crunch on credit availability for the real economy as evidenced by the sharp fall in corporate bond issuance and bills," Bank of America Merrill Lynch economists said in a report.

"But we believe the impact is muted as Premier Li Keqiang's team has taken decisive measures to calm the inter-bank market and to support growth."

Despite July's decline, economists described the month as overall showing "relatively stable credit growth".

A cash crunch spooked Chinese financial markets in late June before the PBoC, which had ordered banks to strengthen liquidity management, moved to calm nerves with an offer of support.

In late July, the PBoC injected 17 billion yuan into the domestic banking system, the first such move since February, a step analysts said indicated the central bank's intention to ease liquidity conditions in the banking system. So far this month it has added another 46 billion yuan.

The brief turmoil in June underscored rising concerns over excessive lending by banks and other weaknesses in China's financial system, including opaque non-bank forms of lending, often called "shadow finance".

Chinese inflation held steady at 2.7 percent year-on-year in July, official data showed Friday, potentially giving the authorities some leeway for economic stimulus.

The consumer price index (CPI) figures from the National Bureau of Statistics (NBS) were marginally below market expectations of 2.8 percent, according to the median forecast in a survey of 14 economists by Dow Jones Newswires.

The CPI reading -- a main gauge of inflation -- has broadly eased since hitting 3.2 percent in February during the Chinese New Year holiday, although it rebounded in June to a four-month high.

The world's second-largest economy -- seen as a key driver of global growth -- expanded 7.8 percent in 2012, its slowest annual pace in 13 years. Growth slipped to 7.7 percent in the January-March period and slowed further to 7.5 percent in the second quarter.

Economists at Bank of America Merrill Lynch in Hong Kong said the inflation figures left room for the government to stimulate the economy if needed.

"Today's inflation data should be positive to markets as the muted inflation reading will provide necessary room for implementing a mini fiscal stimulus and avoiding monetary tightening," they wrote in a report.

Beijing has vowed to retool China's economic model to one focused on consumer spending rather than investment and exports as the key expansion driver. But analysts say it faces slower growth.

China's government has forecast gross domestic product will expand about 7.5 percent this year. It set its inflation target for 2013 at 3.5 percent, higher than last year's actual rate of 2.6 percent.

Inflation in July was driven by food prices, which contributed 1.61 percentage points of the overall gain, the NBS data showed.

Residential costs -- including rent, decoration and electricity charges -- were another main contributor, rising 2.8 percent year on year, according to the NBS.

For the first seven months of the year inflation came in at an annualised 2.4 percent, it added.

China's producer price index (PPI), another key indicator that measures the cost of goods at the factory gate, declined 2.3 percent year-on-year in July, the NBS said in a separate statement, suggesting domestic demand remained weak.

Economist Zhang Zhiwei of Nomura International in Hong Kong said in a report that CPI should "remain stable at around 2.7 percent" during the current third quarter.

The measure was then likely to increase above three percent in the final three months of the year "due to a seasonal pickup in prices", he added.

The inflation figures came after official data last week showed the manufacturing sector remained in expansion mode in July and robust trade figures were released Thursday. Both were taken as possible signs of stability.

Exports and imports, which had contracted in June, rebounded last month, growing 5.1 percent and 10.9 percent year-on-year respectively, according to Customs.

Two-way trade rose 7.8 percent year-on-year, slightly lower than the government's eight percent target for this year but "showing a stabilising and recovering trend", Customs said.


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