Chinese equity investors floundering again (May 08)

China’s headline inflation eased in March, but there are worrying signs that price pressures may be spreading beyond food. The activity data confirm that the economy remains strong, easing at least one set of concerns over the outlook. Export growth has edged down but is still rapid in both dollar and renminbi terms. At home, real consumer spending growth seems to have held up, even though high food prices have eaten into real incomes. With GDP growth still firmly in double digits, policymakers are able to focus firmly on taming inflation. Interest rates increases, on hold since last year, are a possibility once again.