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CHINA: "China Automotive Monthly - Executive Summary (September, 2012)"

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back to index backCHINAtalk May,  2005

China's April producer prices jump 5.8 percent

Fueled by rising energy costs, producer prices rose by 5.8% in April, the highest increase in three months. Most Chinese factories are now operating at or near full capacity, which is in turn leading to higher energy prices.

The figures were released by the Mainland Research Marketing Co., which releases statistics and data compiled by the government's National Bureau of Statistics . The new figures show a rise against the figures for March, which were 5.6%.

Oil prices had jumped by 37% in April, after climbing 32% in March. In April, coal prices had gone up by 26%. Overseas suppliers of raw materials have had a windfall because of demand from China. Higher energy prices are usually passed onto makers of consumer products, but since price competition is so high in China, domestic manufacturers are unable to pass the increases on to Chinese consumers. The result is that profit margins are falling in the consumer goods sector.

For the real estate construction industry, it's a different story. Since there is strong demand and speculation in real estate, developers have been able to absorb the price hikes, which they then pass on to buyers. Real estate prices have risen between 15 - 50% in China's cities over the past year.

The Chinese government has promised to introduce a capital gains tax on real estate for homes bought and sold within two years. However, the exact percentage of the tax has not been revealed yet.

Previous measures to cool the real estate market have been half-hearted, and have not been successful.

Source: China Business Strategy - GAI

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Other articles from the same issue (May,  2005).

Confusion in the face of adversity
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Japan and China will hold an auto dialogue in May, but seeds of conflict remain
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Pricing pressure in China set to intensify
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Corporate execs say supply chains a strategic key to their business future; Expected reliance on China is dramatic
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Scarce labor in China
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China's April producer prices jump 5.8 percent
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