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Updated: 1 min 11 sec ago

Shanghai’s sales of pre-occupied homes fall 57%

Thu, 01/11/2018 - 17:01
SALES of pre-occupied homes more than halved in Shanghai last year while prices fluctuated moderately as local authorities strictly enforced tightening policies to quell speculation, hitting buyers’ sentiment. The Shanghai Existing House Index Office said in a report today that stability would be the key word for 2018 as the rein-in policies are expected to be maintained. Around the city, about 147,700 pre-owned houses changed hands in 2017, a plunge of 56.6 percent from 2016, the office said. In December, around 12,100 units of pre-owned homes were sold, up 5.2 percent from November and a year-on-year drop of 8.5 percent. The index, which tracks month-over-month price changes in 130 areas, dipped 0.17 percent from November to 3,991 last month. That marked a year-over-year drop of 0.13 percent, according to the office. “The monthly price index remained generally flat last year with only moderate fluctuations being recorded over the past 12 months,” the office said. “Looking forward, stability would be the key word for 2018 as no major relaxations on rein-in policies should be anticipated soon while the central government is stepping up its efforts to work on a long-term mechanism that aims to guarantee healthy development of the country’s real estate market.” Meanwhile, pre-owned homes costing between 3 million yuan (US$459,467) and 5 million yuan took up 23.2 percent of the total sold in 2017. Those costing between 5 million yuan and 10 million yuan accounted for 10.1 percent while pre-occupied homes priced at over 10 million yuan grabbed nearly 3 percent, the office’s data showed. Around 124,529 pre-owned homes were available for sale around the city by the end of December, a month-over-month fall of 6.1 percent and a year-over-year drop of 27.3 percent. By proximity to the city center, some 25,748 units were located within the Inner Ring Road, a fall of 7.5 percent. That compared to 63,400 units between the Inner and Outer Ring roads, down 6.2 percent, and 35,381 units beyond the Outer Ring Road, down 5.1 percent from the same time a year earlier. “Continuously tight policies coupled with gradually changing expectations amid the government’s reiterated vows to increase rental supply have kept more home seekers on the sideline,” said Lu Wenxi, senior manager of research at Shanghai Centaline Property Consultants Co. “As a result, more individual owners are starting to offer larger discounts to lure buyers if sluggish momentum continues to linger over the local market.” Currently, buyers of pre-occupied homes could get a 3-to-5 percent discount for medium to low-end houses while a price cut of between 5 and 10 percent is often available for more expensive housing, according to Lu.

Nvidia updates software, says chips not hit by flaws

Thu, 01/11/2018 - 17:01
NVIDIA Corp is updating the software for its graphics processors in response to the Spectre security threat, but its chief executive said on Wednesday its chips were not subject to the same risks as those from Intel and other companies. “Our GPUs are immune,” Nvidia CEO Jensen Huang said, referring to graphics processing units, the chipmaker’s key product. “They are not affected by these security issues.” Huang’s comments illustrate how technology sellers from cloud-based data center providers to anti-virus companies are scrambling to guard against flaws disclosed last week in chips made by Intel and others. Security researchers revealed vulnerabilities, dubbed Meltdown and Spectre, that could let hackers steal passwords or encryption keys from central processing units made by Intel and rivals. CPUs are used on personal computers, smartphones, servers and other devices. The security patches unveiled by Nvidia relate to software drivers that let its chips work with operating systems like Windows. While Nvidia said its GPUs are not flawed, it was updating its drivers because they interact with potentially vulnerable CPUs. It said it had no reason to believe the drivers were troubled by the second flaw, dubbed Meltdown. Intel published data that showed the recent security updates did not have significant performance impact. The data included three generations of processor platforms running Microsoft Corp’s Windows 10 and Windows 7 operating systems, Intel Vice President Navin Shenoy said. While the full extent of devices affected by the flaws is not yet fully known, Cisco Systems has said it has identified 18 vulnerable products and is looking for problems in nearly 30 other products.

China sees slowest rise in auto sales since 2012

Thu, 01/11/2018 - 17:01
China’s auto sales rose 3 percent to 28.88 million vehicles in 2017 from a year ago, the slowest market expansion since 2012, according to data from the China Association of Automobile Manufacturers yesterday.The data revealed the 3 percent growth is lower than an estimated 5 percent growth at the beginning of last year. In 2011, the market grew only 2.5 percent after government ended tax cuts on fuel efficient cars and economic growth slowed. From 2012 to 2016, the growth rate was more than 4 percent annually. China’s auto market surged 13.7 percent in 2016 — a contrast with the weak sales in 2017.“China’s auto market saw minimal growth last year. In 2018, the growth rate of the industry is expected to slow further,” said David Zhang, an independent automotive consultant.CAAM said the auto industry “faced certain pressure in 2017” because of the rise in the purchase tax. The tax for vehicles with engines below 1.6 liters has been raised from 5 percent to 7.5 percent at the beginning of last year, which caused the market sentiment to weaken and resulted in fewer consumers buying small-engine cars.According to data from CAAM, sales of vehicles with engines below 1.6 liters fell over 1 percent to 17.19 million units in 2017 from a year ago.Passenger car sales took up 85 percent of total vehicle sales, with 24.72 million sold in 2017, up 1.4 percent from 2016. Commercial vehicles took up the remaining 15 percent, with 4.16 million units sold last year.

China chips to be used in place of Intel’s

Thu, 01/11/2018 - 17:01
CHINA-DEVELOPED computer chips will be widely adopted in government bureaus and core industries like banks and energy firms, Shanghai-based chip designer Zhaoxin said yesterday. It’s the latest effort by China to improve cyber and technology security nationwide by developing own chips with a high level of security and software amid the furor surrounding security flaws found recently in Intel chips. The chips are developed by Shanghai Zhaoxin Semiconductor Co, and backed by a government fund as well as industry partners including Lenovo Group Ltd. In 2018, Zhaoxin aims to ship about 100,000 to 200,000 computer chips, up from almost 30,000 chips in 2017, said Ye Jun, chairman and chief executive of Zhaoxin. The chip flaws, which affect billions of devices including phones, computers and tablet computers, are due to a fundamental hardware defect that can’t be fixed short of a recall.

Huawei wins patent suit

Thu, 01/11/2018 - 17:01
HUAWEI won a patent infringement lawsuit against South Korea smartphone rival Samsung yesterday, according to information released by a Chinese court. The court ruled in the Chinese company’s favor over two patents involving fourth generation phone technology, according to a notice released through the court’s WeChat account and video of the trial. The judge ordered Samsung Electronics to immediately stop selling or making products using the technology and to pay a small court fee. The ruling did not cite specific phone models. The decision by the Shenzhen Intermediate Court is the latest in a series of deepening patent disputes between the Asian smartphone makers, which have filed lawsuits against each other in the United States and China in recent years. The court said it ruled in Huawei’s favor after finding that Samsung “maliciously delayed negotiations” that began in July 2011 and was “obviously at fault.” Samsung said in a statement that it would “thoroughly review the court’s decision and determine appropriate responses.”

SK eyes ban on cryptocurrency trading

Thu, 01/11/2018 - 17:01
SOUTH Korea’s government said yesterday it plans to ban cryptocurrency trading, sending bitcoin prices plummeting and throwing the virtual coin market into turmoil as the nation’s police and tax authorities raided local exchanges on alleged tax evasion. The clampdown in South Korea, a crucial source of global demand for cryptocurrency, came as policymakers around the world struggled to regulate an asset whose value has skyrocketed over the last year. Justice Minister Park Sang-ki said the government was preparing a bill to ban trading of the virtual currency on domestic exchanges. “There are great concerns regarding virtual currencies and the justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” Park told a news conference, according to the ministry’s press office. After the market’s sharp reaction to the announcement, the Presidential Office hours later said a ban on the country’s virtual coin exchanges had not yet been finalized while it was one of the measures being considered. A press official at the ministry said the proposed ban on cryptocurrency trading was announced after “enough discussion” with other government agencies, including the finance ministry and financial regulators. Once a bill is drafted, legislation for an outright ban of virtual coin trading will require a majority vote of the 297 members of the National Assembly, a process that could take months or even years. The government’s tough stance triggered a selloff of the cryptocurrency on both local and offshore exchanges. Once enforced, South Korea’s ban “will make trading difficult here, but not impossible,” said Mun Chong-hyun, chief analyst at EST Security. “Keen traders, especially hackers, will find it tough to cash out their gains from virtual coin investments in Korea but they can go overseas,” Mun said.

Shanghai shares rise for 10th day

Thu, 01/11/2018 - 17:01
CHINA’S benchmark Shanghai Composite Index rose for a 10th straight trading day yesterday to the highest level since November 22, 2017. Although the index mostly fluctuated under the previous closing, it still closed 0.1 percent higher at 3,425.34 points, extending consecutive rises since December 27. Looking back, the most recent 10-trading-day winning streak on the index was recorded in March 2015, when the country’s stock market was in a strong bullish cycle. The Shenzhen Component Index closed 0.24 percent higher at 11,464.2 points. It has been on a constant rising trend in the past 10 trading days, except for a dip of 0.09 percent on Wednesday. Combined turnover on the two bourses stood at 477 billion yuan (US$73 billion), down from around 516 billion yuan on Wednesday. Analysts call the strong performance at the beginning of the year a “spring rally.” “Spring rallies are mainly driven by sparse data available on Q1 economic fundamentals, usually lower interest rates and relatively high risk preference at the start of the year,” Haitong Securities said. Haitong said the weak performance in November and December 2017 was mainly due to “capital disturbance,” and the recent rally came with a higher liquidity level in the market. Spring rallies often start between late January and early February and last five to nine weeks, Huachuang Securities said, citing data since 2010. In 2017, the spring rally was between January 17 and March 24, which saw the Shanghai index up 5.35 percent, Huachuang said. After rising for 10 straight days, the index has risen 4.57 percent.

HK stocks extend record run

Thu, 01/11/2018 - 17:01
HONG Kong stocks extended their record run into a 13th day yesterday, helped by inflows of cash from mainland traders, while Shanghai clocked up a 10th day of gains. The Hang Seng Index rose 0.15 percent, or 46.67 points, to close at 31,120.39. Global markets have been on a tear at the start of 2018, with Wall Street chalking up records, and others hitting multi-year highs on the back of a healthy economic outlook and optimism for corporate profits. But while most traders from New York to most of Asia have taken a step back, Hong Kong and Shanghai have pressed on, with the HSI now setting its sights on an all-time high of 31,958.41 hit in October 2007.

Driverless monorail launched

Wed, 01/10/2018 - 17:01
A man takes photo of an unmanned monorail launched yesterday in Yinchuan in Ningxia Hui Autonomous Region. Named SkyRail, the unmanned monorail is jointly produced by Chinese IT equipment and smartphone manufacturer Huawei and electric carmaker BYD. — Xinhua

Business as usual for China’s big developers

Wed, 01/10/2018 - 17:01
China’s large developers are tightening their hold on the country’s real estate market, capturing an ever-larger share even as sales growth is expected to slow and worries about debt persist.According to US investment bank Citi, the top 10 Chinese developers are forecast to achieve close to 35 percent market share this year, up from around 27 percent now. They held just 14.2 percent of the market in 2012.The number of developers posting above 50 billion yuan (US$7.7 billion) in sales rose to 40 in 2017 from 25 in 2016, with sales growing from 53 percent to 84 percent, real estate firm CREIS said. The number of smaller developers, with sales between 10 billion and 50 billion yuan, fell to 104 from 106.Although the total number of home transactions is expected to drop about 5 percent, securities firms and rating agency analysts said Hong Kong-listed developers could see 30 percent sales growth on average this year, down from an average of 40 percent growth in 2017.But the growth will not be without risk. Ramped-up land purchases mean the developers will add debt, throwing uncertainty into the stated plans of some to deleverage.China Evergrande and Sunac China had the highest gearing ratios at more than 200 percent in the first half of last year. Both said in October they intended to reduce their debt ratio, but neither halted their buying sprees.If there is a market correction, developers’ liquidity will be tested. But Standard & Poor’s director Christopher Yip said even in that scenario, he didn’t see a large impact.“We don’t think there’ll be a big probability for rated developers to be unable to repay their debt other than very weak ones with poor liquidity and refinancing prospects; others should have secured the financing before they buy land,” Yip said.Several major developers told Reuters that they were confident in double-digit sales growth this year. The companies could not be identified as the information is not yet public.“Last year we sold so many flats, we’ll need to replenish; our land acquisition budget has to be larger than last year because our size is also larger,” said a senior executive of a Shanghai-based developer, who declined to be identified as he was not authorized to speak to the media.A softening but still resilient property market, underpinned by steady prices, would be welcome news for both China’s policymakers and developers. Beijing is eager to keep the market stable as the government tackles an alarming build-up in debt.Many investors are overlooking debt risks and focusing more on revenue, as evidenced by surging share prices.China property stocks were among the best performers in Hong Kong in 2017, propelled by robust sales, with Evergrande up 480 percent, Sunac jumping 460 percent, and Country Garden climbing 270 percent. Nine other developers saw shares surge more than two-fold.Some analysts questioned whether the expansion rate of China’s largest developers could be sustained.“China’s property shares rallied in 2017 thanks to top-line growth, but this momentum will slow in 2018. The growth story this year will be weaker,” said CLSA analyst Nicole Wong. “Last year, many sales were from smaller cities, but as liquidity tightens, sales to these cities will be more difficult.”

Great Wall’s sales reversed in 2017 on SUV rivalry

Wed, 01/10/2018 - 17:01
Chinese automaker Great Wall reported a slight sales decline in 2017 of below market expectations, due to weak performance in the sedan segment and fiercer competition.The company announced that it sold 1.07 million vehicles last year, down 0.4 percent year on year, according to a statement published by the company on Tuesday night.In January last year, Great Wall set its sales target for 2017 at 1.25 million vehicles. Based on the data released, Great Wall only met 85 percent of that target.“The lackluster sales performance last year is due to fierce competition in the sport-utility vehicle segment,” Zhang Xiaofeng, an independent market observer said. “Great Wall faced more and more competition in the market because other domestic automakers also launched their SUV models in 2017 and consumers have more choice.” Great Wall’s decline in sales last year was partly caused by a drop in sedan sales. According to the data provided by the company, sales of Great Wall’s sedans tumbled 60.97 percent annually to 12,033 in 2017.Its overall sales fell in 2017 due to weak sales in December when the firm sold just 125,585 vehicles, down 16.58 percent year on year.Great Wall is known as a competitive SUV producer, but the company’s SUV sales growth was just 0.03 percent last year, compared with its SUV sales in 2016.Pick-up trucks are the only segment which saw stable increase last year for the company, with sales rising 13.47 percent to 119,846 vehicles.Great Wall set its sales target for 2018 at 1.16 million vehicles, up 8 percent from its total sales in 2017.

Memoranda inked to back home rentals

Wed, 01/10/2018 - 17:01
The Shanghai government has signed memoranda with China Development Bank and China Construction Bank separately in a bid to ensure healthy development of the local home rental market.Shanghai Jianxin Housing Service Co Ltd, a company which offers financial services for home rental seekers, was set up on Tuesday during a ceremony attended by Shanghai Mayor Ying Yong, Wang Zuji, president of CCB, and Zheng Zhijie, president of CDB.According to the memoranda, the three parties will strengthen cooperation in various areas such as credit for key projects, comprehensive financial services, and financial innovation, to foster a healthy development environment for the local rental market.The Shanghai branch of CDB and CCB inked house renting deals with local state-owned enterprises such as Shanghai Municipal Investment (Group) Corporation, Shanghai Metro, and Bright Food (Group) Co Ltd to further support their participation in promoting the market.The move is an active response to the central government’s assertion that “housing is for living in, not for speculation.”

Grade A office market vibrant in 2017

Wed, 01/10/2018 - 17:01
SHANGHAI’S Grade A office market performed vibrantly in 2017 despite vacancies rising slightly amid record supply, major international real estate services providers said.More than 2.2 million square meters of new Grade A offices — 1.6 million square meters in the decentralized market and the rest in the CBD — were released to the local market, a record for Shanghai and a significant surge from 1.02 million square meters in 2016, JLL said in a report released yesterday.“Co-working operators, financial services providers particularly domestic firms, retail as well as TMT (technology, media and telecom) companies were major demand drivers in the city’s Grade A office market over the past year,” said Eddie Ng, managing director for JLL’s East China operation. The average vacancy climbed 2 percentage points year on year to 10.2 percent in the CBD at the end of 2017 while that in the decentralized market gained 8.8 percentage points to 26.8 percent during the same period, according to JLL data.Meanwhile, landlords in core CBD areas have been facing high pressure in rents from their counterparts in decentralized areas.“As new supply of Grade A offices is expected to remain high in 2018, some office owners in core CBD areas have adjusted their rental expectations to retain or attract tenants which, therefore, led to a moderate year-over-year decrease in the core CBD area,” said Timothy Chen, director of research for Colliers International’s East China operation.Core CBD Grade A office rents were 10.19 yuan (US$1.56) per square meter per day at the end of the fourth quarter, down 2.4 percent from the end of 2016, Colliers data showed.

Apple to localize iCloud services

Wed, 01/10/2018 - 17:01
APPLE Inc’s iCloud services in China will be operated by a domestic firm from next month in response to consumer complaints over the slow speed and loss of data, the company said yesterday. The move also helps Apple to better comply with Chinese cyber security laws on data privacy, which require all foreign companies to store data of Chinese users domestically, according to analysts. The iCloud service will be operated by Guizhou Cloud Big Data, a government-backed firm based in Guizhou Province in south China. iCloud data will be transferred from 28 February. However, iCloud accounts registered outside China are not affected, according to Apple. “It’s a natural move for Apple to be more localized in China, as many foreign Internet firms do,” said Jia Mo, analyst at research firm Canalys. “Chinese operators are expected to offer better services for local consumers.” It is hoped that the move will "improve the speed and reliability” of iCloud services while also “complying with newly passed regulations,” Apple said. Consumers complained that the iCloud, which allows iPhone and iPad users to store and synchronize pictures, videos, and documents online, has caused them to lose data, is hard to access and suffers slow upload speed. Apple China offers them limited technical support as its iCloud team is based outside the mainland, Shanghai Daily learned. Apple previously said that it would invest US$1 billion in Guizhou to build the data center and to set up new research hubs in Shanghai and Suzhou. Amazon and Microsoft also plan to transfer data hubs in China to local partners.

Shares hit 9-day rising stretch

Wed, 01/10/2018 - 17:01
SHANGHAI shares notched a nine-day rising streak yesterday, helped by bank and oil companies. The Shanghai Composite Index gained 0.23 percent to 3,421.83 points. Industrial Bank Co rose 5.82 percent to 18.18 yuan (US$2.79) and China Construction Bank Corp added 2.91 percent to 7.78 yuan. Banking shares climbed amid expectations of liquidity being loosened as “the central bank shows few signs of raising interest rates,” said Kang Shuiyue, an analyst at Sun Investments, a domestic asset management company. Oil giants were lifted by surging crude prices, given that Brent crude closed at US$68.82 per barrel yesterday, the highest level since December 2014. PetroChina Co gained 2.82 percent to 8.75 yuan while China Petroleum & Chemical Corp rose 2.14 percent to 7.15 yuan. Oil prices rallied amid political turmoil in oil producer Iran, and shrinking crude inventory in the US, said Luo Libo and Wang Ke, analysts at GF Securities. They added the continuous output cuts among members of the Organization of the Petroleum Exporting Countries would further raise crude prices in the coming days.

AT&T drops plan to sell Huawei phones

Wed, 01/10/2018 - 17:01
TELECOMS carrier AT&T has dropped plans to sell China’s Huawei smartphones in the United States, dealing a setback to the No. 3 global phone maker’s expansion plans, according to news reports. The Wall Street Journal, which reported the development on Tuesday, gave no reason for AT&T Inc’s decision. Hong Kong’s South China Morning Post said Huawei Technologies Ltd’s vice president for consumer business, Richard Yu, confirmed the move in a text message to the newspaper and wrote, “We have been harmed again.” A Huawei spokesman declined to comment. Yu said in December the company would announce smartphone sales through a US carrier this week. Huawei sells some models in US electronics stores and online but has a minimal share of an American market in which most sales are through carriers. Ahead of the planned announcement, Huawei had issued a statement that said, “Over the past five years Huawei has proven itself by delivering premium devices with integrity globally and in the US market. On Tuesday Huawei will introduce new products to the US market, including availability.” Globally, Huawei’s handset business trails Samsung and Apple by shipments. But it leads in China, the biggest market, and says it expects to ship a total of 150 million units this year. Huawei’s shipments rose 16.1 percent in the latest quarter over a year earlier to 39.1 million handsets, ahead of Apple’s 2.6 percent growth to sales of 46.7 million, according to IDC.

Consumer finance to drive consumption rise

Wed, 01/10/2018 - 17:01
CONSUMER finance is seen as the driver in boosting consumption growth in China which, in turn, will greatly impact the country's economic transformation, according to a report of Tsinghua University yesterday. “I believe that consumer finance will be an important industry, as consumer finance is substantially serving the real economy,” said Li Daokui, professor at the Center for China in the World Economy in Tsinghua University. Li spoke at third China Consumer Finance Forum held by the center which released a research report on Chinese consumer credit market in 2017. Consumer financial services are a good way to complement traditional financial services because the former can be a catalyst to help people to pursue new consumption patterns, the report said. The report suggests that the consumer finance market should emphasize regulation and innovation in order to ensure the healthy and sustainable development of the market.

Chinese yuan weakens to 2-week low

Wed, 01/10/2018 - 17:01
THE central parity rate of the yuan weakened 239 basis points to 6.5207 against the US dollar yesterday, a two-week low. The lowest rate since December 29 came after drops in the offshore yuan against the dollar on Tuesday following rumors that the country’s central bank had notified lenders to suspend the “counter-cyclical factor” in the pricing mechanism of the yuan’s central parity rate. The People’s Bank of China said in response that parameters of the “counter-cyclical factor” are determined by market-making banks based on their own judgment on the macro-economy and the foreign exchange market. Last May, authorities introduced the “counter-cyclical factor” to the existing pricing model of the yuan’s central parity rate against the dollar, aiming to moderate pro-cyclical fluctuations driven by irrational sentiment in the forex market. In China’s spot market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day. The central parity rate of the yuan against the dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market. The China Foreign Exchange Trade System said China’s forex market is prone to irrational expectations due to a certain level of “pro-cyclicality,” which distorts market demand and supply, and increases the risk of the market exchange rate overshooting. Adding the “counter-cyclical factor” to the existing model will help to correct the trend and steer market attention to the macro-economy, it said. China has been pushing reform of the yuan’s exchange rate formation system to make the currency more market-oriented and help to stabilize expectations. The yuan has seen sustained strength this year, with its central parity rate strengthening to a 20-month high against the dollar on Monday.

Macron reveals China to purchase 184 Airbus jets

Wed, 01/10/2018 - 17:01
FRENCH President Emmanuel Macron said yesterday that a contract with China for 184 Airbus A320 narrow-body jets would be finalized soon and that his country also had ambitions to sell A350 and A380 planes to China in coming weeks or months. The potential A320 order, which had not been previously announced, would be worth more than US$18 billion at list prices. “On the order for 184 A320s, it’s something that will be finalized shortly,” Macron said, adding that it was confirmed to him by Chinese President Xi Jinping. “President Xi confirmed to me that China will maintain the volume of orders in the coming years and preserve parity with the market shares of Airbus and Boeing,” Macron said. “And we also have ambitions on A350 and A380 mid-range and large carriers in the weeks or months to come,” Macron said as he wrapped up a visit to China with several business deals. The A320s would be delivered in 2019 and 2020, a French presidency official said. Ahead of Macron’s trip, sources had said that Airbus was in talks about an order for 100 or more jets. New jet orders have historically featured during such tours by French leaders. While no deal has been finalized over the current official visit, Macron said Chinese officials had assured him that Beijing would respect market-share parity between Airbus and Boeing. China regularly splits large orders between Europe and the United States to cope with its fast expanding airline traffic, but the momentum has recently been with rival Boeing, which sold 300 jets during a visit by US President Donald Trump last November. China, however, placed a large order for 140 Airbus jets during a visit to Germany by Xi last July. Airbus signed a provisional deal on Tuesday to boost the number of A320 family jets assembled in Tianjin to six a month by 2020 from four currently. Other business deals were made during Macron’s visit, including one for French state energy giant Areva to help to build a nuclear spent fuel reprocessing plant in China.

Consumer inflation cools as food costs fall

Wed, 01/10/2018 - 17:01
CHINA’S consumer inflation cooled last year while factory-gate prices rose for the first time in six years amid stable economic growth, National Bureau of Statistics data showed yesterday. The Consumer Price Index, a main gauge of inflation, rose 1.6 percent year on year in 2017, lower than 2016’s 2 percent. The 2017 increase was in line with market expectations. The Producer Price Index, which measures changes of prices at the factory gate, rose 6.3 percent last year, ending a falling streak over the past five years. Last month, consumer inflation was 1.8 percent, up from November’s 1.7 percent. PPI in December rose 4.9 percent year on year, down from November’s 5.8 percent and the slowest pace since November 2016. Sheng Guoqing, a senior statistician of the bureau, said food prices fell in 2017 for the first time since 2003 led by pork and fresh vegetables, contributing to the milder consumer inflation data. Non-food prices rose 2.3 percent year on year, 0.9 percentage points faster than 2016, as service prices rose 3 percent. The rising factory-gate prices were led by oil and gas, coal, and metal sectors, said Sheng, though the pace has been slower in the second half. Lian Ping, chief economist of the Bank of Communications, said the core CPI, which doesn’t include food and fuel prices, rose 2.2 percent last year, indicating stable domestic demand and economic growth. A recovery of food prices this year may see CPI reach 2 percent, he added, while weakening momentum of commodity prices will slow down the PPI increase this year to 3.5 percent. “Prices conditions this year will support stable economic growth and will not press adjustment in monetary policies,” Lian said. Australia and New Zealand Banking Group economists said in a note that China’s capacity-reduction program for steel and coal will likely be completed this year and extended to other sectors, sustaining growth in factory-gate prices. The ANZ economists expected China’s central bank to steer money market interest rates up by 35 basis points in an effort to support its deleveraging campaign. GDP grew 6.9 percent year on year in the first three quarters of 2017, above the government’s annual target of around 6.5 percent. The statistics bureau is due to release 2017 GDP growth next Thursday. Wang Tao, UBS chief China economist, said on Tuesday she expected China’s economy to grow 6.8 percent last year and 6.4 percent this year. She said a weaker home market and infrastructure investment will overshadow growth in industrial profits and consumption.

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