After some research, Song Yu and Liang Hong, Goldman Sachs’ economists said, “With inflation at a decade high level, it is not surprising to see nominal retail sales reaching a decade high as well.” They estimated the growth of retail sales in April stood at 13 percent year-on-year.

The growing consumption may be caused by rising inflation which forced consumers to pay not only for daily necessities, but also durable and luxury goods. It was also due to the growing willingness to consume under a high-inflation environment. The April report shows sales in furniture rose by 37.2 percent, automobiles, 25.7 percent, and gold and silver jewelry, 41 percent.

Consumer price index rose to a 12-year record high, which was up 8.7 percent in February. It dropped slightly in the following two months. But consumer inflation still stood at 8.2 percent for the first four months. Compared with 7.47 percent, the benchmark one-year lending rate, the figures represent a negative interest rate.

Cao Shuang, an anesthetist from a hospital in Shanghai, spent 600 yuan buying a gold pig as a mascot for her newborn baby. He thought it would not only bring good luck but is a good investment as gold is rising in value these days.

In April, sales for construction and decoration materials declined 1.2 percent compared with a year ago, which reflecting the weakness of the property market; housing prices have continued rising in recent months; mortgage loan growth has also slowed down for the first quarter in Shanghai. In March, it is reported that lenders in the city even have negative growth in mortgage loans.

Are you interested in the business opportunities in China?

China is one of the world’s great growth markets and is likely to be for many years to come. Foreign companies often face difficulties in assessing Chinese market demand and enacting effective strategies because of the language barriers, culture differences, and high expense.

BPOVIA is the leading virtual assistant and Knowledge process outsourcing (KPO) service provider in China. BPOVIA is the only virtual assistant company ever been nominated for the prestigious “Red Herring 100 Asia” Awards 2008. Combines international perspective with local know-how, BPOVIA can provide our clients China business development service and help our clients doing successful business in China.

Please visit http://www.BPOVIA.com/ for details about our service.

Compared with State-owned enterprises, SMEs are much more vulnerable. Latest statistics from the National Development and Reform Commission show that in the first six months of 2008, about 10 percent of SMEs reported an average 15 percentage point drop in their industrial output growth from a year earlier to 30 percent. This indicates a significant shrinkage in their profit margins. SMEs have also been hit by the credit crunch resulting from the government’s tightening monetary policy to fight inflation.

Many reasons are unfavourable to SMEs. At a time when credit is tight, banks have understandably focused lending operations on traditional customers — large State-owned enterprises, which are much more creditworthy than SMEs. According to figures released by the China Banking Regulatory Commission, total loans obtained by SMEs in the first quarter of 2008 dropped by 30 billion yuan year-on-year.

In order to solve the problems of SMEs, the central government has taken several steps to provide the capital- thirsty SMEs with a wider access to loans. In early August, the National Development and Reform Commission said it was considering establishing a bank specializing in lending to SMEs to broaden their sources of finance. A week later, the People’s Bank of China increased the annual loan quota by 5 percent for national commercial banks and by 10 percent for local commercial banks, taking into consideration that SMEs make up a larger proportion of their clients.

In addition to the efforts made by the central government, many local private-sector trade agencies have organized financing opportunities for SMEs.

In a lot of provinces of China, more and more micro credit lenders are in the process of being established. As we all know, private capital is playing an increasingly important role in funding the growth of SMEs. Now, more private capital is being pumped into SMEs in the form of micro credit, and eases their capital shortage.

As the situation of SMEs is becoming better, it is believed that SMEs like BPOVIA will have a brighter future.

Are you interested in the business opportunities in China?

China is one of the world’s great growth markets and is likely to be for many years to come. Foreign companies often face difficulties in assessing Chinese market demand and enacting effective strategies because of the language barriers, culture differences, and high expense.

BPOVIA is the leading virtual assistant and Knowledge process outsourcing (KPO) service provider in China. BPOVIA is the only virtual assistant company ever been nominated for the prestigious “Red Herring 100 Asia” Awards 2008. Combines international perspective with local know-how, BPOVIA can provide our clients China business development service and help our clients doing successful business in China.

Please visit http://www.BPOVIA.com/ for details about our service.

Rising inflation is a serious threat to the region’s sustained, strong growth as high import costs of food and fuel threaten to trigger a price and wage spiral, unleashing more inflation, the insider commented. Although the inflation rate had dropped 1.6 percent in February, the possible energy price liberation may bring the high rate back. And all signs show that a second-round price effect may be underway.

And the worsen economy situation especially the banking crisis has triggered global worry that the economic slowdown across the globe may continue. And Chinese economy is influenced by it.

China‘s comparatively quick economic growth still makes it one of the destinations for international speculators, although it’s stock market has become lusterless because of the global turbulence caused by American subprime crisis. Moreover, the central bank has taken several monetary measures, which has proved “effective”, to bring down the main stock index and stem the inflation. For example, raising the reserve requirement ratio 11 times and the benchmark interest rates 6 times since last year to absorb excess liquidity.

As the yuan is rising, it’s difficult for some enterprises to stay in the competitive market. If they wanted to survive in this competition, they had better upgrade their technology and strengthen their competitive power to lessen the impact of rising labor cost and possible energy pricing mechanism.

Even though many investors in China seemed to think the government would do whatever it could to keep stock prices high before the Olympics.