China's CPI to turn positive in Q3: HSBC Chief Economist

With stimulus
policies contributing effectively to recovery and domestic demand ever
growing, China's consumer price index (CPI) will start to turn positive in the
third quarter of 2009, predicted Qu Hongbin, Chief Economist for HSBC.


Speaking at the Spring Membership Meeting of the
Institute of International Finance Wednesday, Qu is optimistic
about the CPI trend in China based upon the economic data
released by the National Bureau of Statistics(NBS).


"The CPI decline in May is mainly caused by the falling
price of commodities from the price hike early last year," said Qu.

"Currently, the price of communities has turned up from
the lowest point, therefore CPI will bottom out and turn positive in the third
quarter, which will also be consolidated by growing domestic demand and the
recovery of economy," Qu added.


CPI in May fell 1.4 percent year on year, the fourth
consecutive monthly decline since the index dropped 1.6 percent in February, the
first fall after October 2002, according to NBS.


Compared with the fall of 1.5 percent year on year in
April, the May decline was slightly slowed -- a sign of a sustained economic
recovery, according to Qu.


To support his positive view on China's recovery, he
cited several figures: fixed asset investment jumped 30.5 percent in
the four months, industrial output grew 7.3 percent in April, consumer
spending, as gauged in retail sales, expanded 14.8 percent year on year in
April, and the property prices in 70 large and medium-sized cities shrank
to 0.6 percent year-on-year in May from 1.1 percent in April.


This obviously proves the Chinese government's 4
trillion yuan investment plan has started to take effect, Qu concluded,
adding its GDP growth in the second half of the year will exceed 8 percent.



China reports slower decline in May
CPI, indicating continuing recovery







Graphics shows China's consumer price
index (CPI) in May fell 1.4 percent year-on-year, the National Bureau of
Statistics of China announced on June 10, 2009. (Xinhua/Zhang
Liyun)
Photo
Gallery>>>


by Xinhua writers Chen Yongrong and Huang Xin

BEIJING, June 10 (Xinhua) -- China's consumer price
index (CPI), the main gauge of inflation, in May fell 1.4 percent year on year,
the National Bureau of Statistics (NBS) announced Wednesday.

This marks the fourth consecutive monthly decline
since the index dropped 1.6 percent in February, the first fall since October
2002. However, the decline was 0.1 percentage points lower than the April level.
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