By Greg Peel

Global markets remain afraid that Beijing will tighten policy too swiftly and bring China in for a hard landing, thus upsetting global growth. Given Beijing only moves slowly, the chances of this are fairly minimal. But then the yang to the yin is that if Beijing doesn't keep the brakes on the boom, a bust may well follow anyway.

After China's consumer price index showed a drop of 0.2% in March, affecting an annual rate of 5.4%, economists had expected another drop would take the annual rate to 5.2% in April. Then a rumour began to spread ahead of the official announcement that the result was going to be 5.1%.

Markets were thus disappointed when the official number came out at 5.3%. It might have been lower than 5.4% but it was ahead of expectation, and on a month-on-month basis actually represented a gain of 0.1%. This may well mean more tightening ahead, but then there was probably going to be more tightening ahead anyway.

The producer price index rose to 6.8% but was below the expectation of 7.3%. Industrial production increased only 13.4% when 14.5% was expected, and retail sales rose only 17.1% when 17.8% was expected. All of these results suggest an easing of inflationary pressure (albeit the world still wants China to buy more of its “stuff” so it doesn't much like weaker sales results).

The money supply also grew only 15.3% compared to a 16.5% expectation, but then Beijing has begun to acknowledge that Chinese investment, particularly in property development, is being financed through private debt issues as well as state bank borrowings. As it happens, fixed asset investment rose 25.4% compared to a 24.9% estimate.

A mixed bag then. Driving the overall Chinese CPI is food inflation, and that fell to 11.5% growth from 11.7% in March. It's the right direction but not very material, and global weather impacts are still playing havoc with food prices.

There is little here to suggests Beijing is going to drastically change tack in either direction.

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