China's Consumer Inflation Accelerates In April, Weak Demand Keeps New Bank Loans In Check

Li Chen
13 May, 2024
Hong Kong

Benchmark indexes in Shanghai and Hong Kong rebounded on Monday on earnings optimism. 

Market sentiment was cautiously optimistic in early trading after investors shifted their focus to earnings announcements from Alibaba.com and Tencent Holdings. 

Investors are expecting Tencent earnings to advance by 34% and Alibaba earnings to fall by less than 39% in the first quarter. 

Investors also took note of a possible increase in U.S. tariffs for China's electric vehicles, batteries, and solar cells as early as next week. 

Market sentiment was weak in Monday's trading after U.S. President Joe Biden's administration proposed to increase tariffs on electric vehicles and a range of new energy products, including solar panels and batteries. 

The news was first reported by the Wall Street Journal and independently confirmed by Ticker.com from sources in Washington, D.C. 

The tariffs are expected to be announced as early as next week, and tariffs are expected to rise to as much as 100% from the current 27% on most of the new energy products. 

On the economic front, China's annual consumer price inflation rose by 0.3% in April, the National Bureau of Statistics reported over the weekend. 

Inflation accelerated from a 0.1% rise in March and rose for the third month in a row, driven largely by the increase in non-food prices. 

Producer price inflation fell annually by 2.5% in April, and the measure of wholesale inflation declined for the 19th month in a row. 

China's aggregate lending in April declined by 200 billion yuan, or about $28 billion, the People's Bank of China reported over the weekend. 

The broad measure of credit and liquidity decreased from 4.87 trillion yuan in March, reflecting seasonal weakness in April.

The new loans issued by Chinese banks dropped to 730 billion yuan, sharply lower than 3.1 trillion yuan in March and the smallest amount since July 2023. 

The CSI 300 index increased 0.01% to 3,666.88, and the Hang Seng index advanced 0.5% to 19,049.09. 

New energy product makers were among the leading decliners following the news of a possible tariff hike in the U.S. 

CATL declined 1.8% to 199.88 yuan in Shanghai trading. 

BYD declined 0.1% to HK$223.20, Li Auto decreased 0.3% to HK$102.80, and Xpeng fell 2% to HK$31.30. 

Tencent Holdings rose 1.8% to HK$377.80, and Alibaba Group jumped 4.6% to HK$81.55.