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Investment and retail sales hikes spur optimism

SHANGHAI'S fixed-asset investment in the first five months jumped 7.8 percent from a year earlier to 165.4 billion yuan (US$24.2 billion), up 3.7 percentage points compared with the period through April, the Shanghai Statistics Bureau said today.

And the city's retail sales advanced 12.4 percent in May on an annual basis to 43.4 billion yuan, keeping a fast growth momentum and bolstering Shanghai's economy when external demand remained weak.

"The expansion in FAI and retail sales are extremely important to sustain the city's economy when the exports continued to sink," said Wang Zehua, an analyst with the bureau.

Shanghai is aiming at a 9-percent economic growth this year. In the first quarter, the city's gross domestic product tailed off to 3.1 percent after posting a 9.7 percent growth last year, the first single-digit expansion in 17 years mainly due to faltering demand in overseas markets.

Shanghai has not announced its May export figures but in April, the city's overseas sales fell 26.2 percent year on year. On the national level, China's exports plummeted 26.4 percent in May, the biggest fall in at least 14 years.

But Shanghai's major economic data have shown improvement in May, signaling the city may be on the path to recovery.

Industrial production in Shanghai declined 2.1 percent from a year earlier to 188.9 billion yuan last month. The pace of contraction narrowed from drops of 5.2 percent in May and 7.1 percent in March.

The Consumer Price Index, the main gauge of inflation, also scaled back to a drop of 1.2 percent in May from the fall of 1.4 percent in April.

In the first five month, investment on urban infrastructure construction jumped 18.5 percent to 59.8 billion yuan.

Investment on industrial projects through May expanded for the first time this year, edging up 0.1 percent compared with a year ago to 41.6 billion yuan.

Leading the retail sales, consumers spent 2.3 billion yuan last month buying cars, up 1.8 percent from a year earlier. Spending in the catering industry jumped 13.6 percent to 6.6 billion yuan.


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