The following article is from London’s Financial Times.

Consumer prices in China rose 2.8 per cent in April from the same month a year earlier, the fastest pace in 18 months but below Beijing’s full-year target of 3 per cent, data released on Tuesday showed.

Adding to fears of potential overheating, Chinese property prices jumped 12.8 per cent in April from a year earlier, the biggest increase since records began in 2005, although sales volumes have already fallen substantially in many big cities in reaction to a string of government measures to cool the market.

Producer prices rose 6.8 per cent in April, up from March’s 5.9 per cent rise, indicating that consumer prices are likely to increase faster in the coming months.

“Virtually everything is on the rise in China, from wages to grain and vegetables and we expect inflation above 5 per cent by the end of the year,” said Dong Tao, chief regional economist for non-Japan Asia at Credit Suisse. “Inflation will be the biggest worry in the second half of this year and everybody in China except government economists seems to have realised inflation won’t peak in the middle of the year.”

New bank lending in April reached Rmb774bn ($113.3bn), higher than most economists had forecast but less than in the first two months of the year and well below the frantic pace in the first half of last year.

Food prices make up about a third of China’s consumer price index and were the main driver of higher inflation in April, rising 5.9 per cent from a year earlier, while non-food prices rose 1.3 per cent.

“China is at risk of overheating, with spot fires breaking out in various parts of the economy, most notably in the property market and bank lending,” according to Brian Jackson, a strategist at Royal Bank of Canada in Hong Kong. “We expect Beijing will soon move to hike lending rates and allow moderate currency appreciation against the dollar.”

With the benchmark one-year bank deposit interest rate at 2.25 per cent, Chinese savers are already faced with negative real interest rates, making investments in the booming property market more attractive.

Credit Suisse estimates China’s coastal areas are experiencing a labour shortage of at least 6m workers, with the shortfall now spreading from manufacturing to the service sector and adding to inflationary pressures.

China’s statistics bureau said on Tuesday that the country was facing higher inflation in the near future but insisted the government would probably meet its full-year inflation target of 3 per cent.

The following article is from Reuters.

China returned to familiar territory in posting a trade surplus in April, but exports only narrowly topped imports, providing limited comfort for policymakers fearful of another round of global economic turmoil.

China recorded a $US1.7 billion trade surplus last month, defying expectations for a second straight deficit after March’s $US7.2 billion shortfall.

Exports rose an annual 30.5 per cent in April, topping forecasts for 28.9 per cent growth. Imports were up 49.7 from a year earlier, missing forecasts for a 53.8 per cent increase.

“Expectations for yuan appreciation will continue to exist, but April’s strong export figure alone will not have a big impact on timing,” said Sun Wencun, an economist with CITIC Securities in Beijing.

China has frozen its currency against the dollar since mid-2008, trying to cushion its exporters from the global financial crisis.

Speculation had swirled in recent weeks that it was only a matter of time before Beijing let the exchange rate resume appreciation, but many analysts believe that international jitters in the wake of Greece’s debt crisis could stay its hand.

“These numbers largely pre-date the escalation of the euro-area sovereign debt crisis and the sharp sell-off in the euro, so it is still too soon to tell whether we will see weaker European demand for Chinese exports in the months ahead,” Brian Jackson, an economist with the Royal Bank of Canada in Hong Kong, said in a note.

Back to surplus

China’s leaders have said they want to be sure that external demand has made a sustained recovery before unwinding policies introduced at the height of the global credit crunch, including the yuan’s de facto peg and a range of tax rebates given to exporters.

But the world’s third-largest economy slipped into trade deficit in March — its first in six years — more because of domestic strength than external weakness.

With China growing 11.9 per cent in the first quarter from a year ago, its appetite for energy and raw materials has been voracious.

April may prove something of an inflection point, with base effects over the rest of the year likely to push export growth rates higher, while the pace of import increases slows.

Grace Ng, an economist with J.P. Morgan in Hong Kong, forecast that China would run a $US100 billion trade surplus this year.

“We’ve been saying that the March trade deficit was temporary. We are looking for the full-year trade balance to come back into a solid balance situation,” she said.