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POLITICAL ECONOMY
China manufacturing index hits nearly one-year high
by Staff Writers
Beijing (AFP) April 1, 2013


China home prices pick up in March: survey
Shanghai (AFP) April 1, 2013 - Chinese home prices picked up in March as buyers rushed to beat new government policies aimed at cracking down on speculation, an independent survey showed Monday.

The cost of a new home in 100 major cities was up 3.9 percent year-on-year to an average 9,998 yuan ($1,587) per square metre, the China Index Academy said, the fourth consecutive monthly rise.

In February, home prices rose 2.48 percent.

On a monthly basis, prices rose 1.06 percent in March from February, continuing a run of increases for the 10th month, the organisation said in a statement.

China issued new rules in March to rein in prices, including a nationwide capital gains tax of 20 percent on profits owners make from selling residential property.

Major Chinese cities, including the capital Beijing and commercial hub of Shanghai, have started to announce detailed policies on how they will implement the central government edict.

"Against the unclear policy trend, most buyers caught 'the last bus' to enter the market," said the China Index Academy, which is owned by SouFun Holdings, China's biggest real estate website operator.

"A portion of demand surged into the market accelerating the housing purchase process on panic and psychological pressure from worries over an increase in tax," it added.

Chinese couples have also flocked to divorce to evade the new tax, through a loophole which allows couples with two properties who separate and put each house into one person's name to then sell them tax-free in certain cases.

At the same time, a state media report on Monday warned of the possibility of buyers in Beijing entering fake marriages to circumvent a new rule barring single people from purchasing a second property in the capital.

Some analysts question what impact the latest government measures will have in the shorter term.

"The good news is that the new tightening measures will likely have only limited impact on overall property sales and construction this year," said Wang Tao, a Hong Kong-based economist for UBS.

"The bad news is that if the current measures do not work, new rounds of tightening will be rolled out," she said in a research report last week.

For the past three years, China has sought to control residential property prices with measures including restrictions on second and third home purchases, higher minimum downpayments, and taxes in some cities on multiple and non-locally owned homes.

Manufacturing activity in China expanded at its fastest pace in almost a year last month, official data showed Monday, indicating conditions in the world's number two economy continued to improve.

The official purchasing managers' index (PMI) hit 50.9 in March, the highest since April 2012 when the figure stood at 53.3, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing (CFLP).

PMI is a widely watched barometer of the health of China's economy, with a reading above 50 indicating expansion while anything below points to contraction.

The March reading improved from 50.1 in February and signalled the sixth consecutive month of expanding manufacturing activity in the country.

The rebound in PMI last month was led by increasing new orders as demand improved, driven by exports and investment, said Zhang Liqun, a government analyst, in a CFLP statement.

"The current data showed the economy generally remained stable. But we have to keep a close eye on changes that may take place in the coming months," Zhang said.

British bank HSBC -- whose survey focuses more on smaller enterprises -- said its final PMI for March stood at 51.6 in March, up from 50.4 in February, when the reading dipped to its lowest since October.

"China's recovery continues, mainly driven by the gradually improving domestic demand conditions," said Qu Hongbin, a Hong Kong-based economist with the bank, in a statement.

Declining input prices and "lingering external headwinds" -- an apparent reference to the eurozone's woes and the sluggish US recovery -- indicated that inflationary pressures were easing, he said.

China's economy expanded 7.8 percent in 2012, its slowest pace for 13 years, in the face of weakness at home and in key overseas markets.

But growth accelerated in the final three months of last year to 7.9 percent, snapping seven straight quarters of weakening expansion.

However, government figures pointed to a slowdown in retail sales growth last month, suggesting the budding recovery may be fragile.

China's inflation hit a 10-month high of 3.2 percent in February, up from January's 2.0 percent, as holiday season spending and rapid credit growth accelerated price rises.

China's ICBC shares down after slower profit growth
Hong Kong (AFP) March 28, 2013 - Shares in the Industrial and Commercial Bank of China (ICBC), the nation's biggest lender by assets, fell in Hong Kong Thursday after it reported a slowdown in profit growth for 2012.

The firm slipped 1.65 percent to HK$5.36 ($0.69) in morning trade, a day after reporting net profit for rose 15 percent to 238.53 billion yuan ($38.38 billion) last year.

That compared with a jump of 26 percent in 2011 and represented the weakest pace since 2006, with the bank blaming a slowdown in China's economic growth, lower interest rates and a deeper financial regulatory reform.

ICBC's net interest income, which accounts for almost 80 percent of its operating income, increased by 15.2 percent to 417.83 billion yuan.

"Faced with complicated and severe economic and financial situations at home and abroad, the bank adhered to its consistent philosophy of prudential operation in actively coping with a variety of challenges," ICBC said in a statement issued late Wednesday.

Two of China's biggest banks, Bank of China and Agricultural Bank of China, also recorded weaker profit growth for 2012 this week.

China's economy expanded 7.8 percent in 2012, its slowest pace for 13 years, in the face of weakness at home and in key overseas markets.

-- Dow Jones Newswires contributed to this story --

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