Cool heads needed in viewing China's economy

Updated: 2014-05-16 09:33


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BEIJING - Recent statistics show China's industry, investment and consumer price index grew at a slower pace, but these are temporary fluctuations and no cause for panic as several upbeat signals were easily overlooked amid the gloom.

Every coin has two sides. China's Consumer Price Index increased 1.8 percent year on year in April, much lower than the 2.4 percent in March. But the positive view is that China has no worries about inflation and is in a strong position to keep its interest rates low.

China's producer price index contracted 2 percent in April, following a 2.3 percent decline in March, pointing to low confidence among enterprises. But this was a lag effect reflecting the winter slowdown and should not be read as a sign of the future.

The real estate development climate index dropped 0.61 points from March to 95.79 points in April, its third consecutive monthly decline. But China's central bank responded quickly, urging commercial banks Tuesday to speed up approving and issuing loans to qualified home buyers.

On a positive note, the 8.7 percent year-on-year industrial added value growth reading in April, if sustained in May and June, means gross domestic product (GDP) expansion in the second quarter could be similar to the 7.4 percent pace in the first quarter of 2014.

The purchasing managers' index (PMI) for the manufacturing sector also rose, to 50.4 in April, up from 50.3 in March.

Foreign trade in the first four months of this year saw a moderate increase through policy support and improving exports to major countries, though the global economic situation is gloomy in general.

So the picture is not as gloomy as some foreign media insist.

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