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Last week China economy review and analysis (May 12, 2010)

Contributed by Daniel Stewart & Company

By Daniel Stewart & Co

There has been plenty of data this week. Perhaps not surprisingly, the draconian restrictions on the property market are clearly not working yet and prices in April even went up 12.8%. Inflation as measured by CPI is going up but is still below 3%. Industrial Production is still at a level that European leaders would die for. The Trade Balance was back in surplus after a deficit in March but down 89% year on year. Overall, GDP growth estimates are being revised down to below 10% in 2010. This somewhat downbeat data lies behind the rather dismal performance of the Shanghai Composite Index which is now technically in a bear market.

With the Sino-American Dialogue taking place this month there has been renewed speculation of a currency revaluation. The phrase ‘basket of currencies’ has been reinstated in official statements and this is not thought to be a routine change.