China Inflation Rises 2.8% in April

BEIJING -- China's inflation accelerated in April, triggering a selloff in Chinese stocks Tuesday on fears of overheating and a possible credit clampdown by Beijing that might slow the country's economic recovery.

April consumer prices rose 2.8% from a year earlier, below Beijing's full-year target of 3%, but up 0.4 percentage points from March, the National Bureau of Statistics said. Food prices jumped 5.9%, up from March's 5.2% rate.

"Growth in the consumer price index is still mild compared with our economic recovery and inflation in other countries," said a bureau spokesman, Sheng Laiyun. "But we are facing big inflation pressures in the short term."

Foreign companies and investors are watching Chinese inflation because any moves to cool prices might slow stimulus-fueled economic growth that surged to 11.9% in the first quarter. That could hurt the global recovery if it weakens demand for foreign iron ore and other imports.

Economists said inflation is still relatively low and Beijing was unlikely to react with an immediate rate hike at a time when the global outlook still is uncertain amid the European debt crisis.

"Overall, we don't see this as threatening yet for the economy," said Standard Chartered economist Jinny Yan. "What they will do is observe external markets for a while longer before deciding what to do."

But the data spooked investors and China's main stock index tumbled 1.9 percent to close at its lowest level in 11 months.

"Investors worry there is a chance of the economy overheating, and that might trigger more government policy tightening," said Huang Xiangbin, an analyst for Cinda Securities in Beijing.

The government worries about a surge in housing and other asset prices and is trying to use lending curbs to prevent a dangerous bubble while avoiding an across-the-board rate hike that might slow growth.

Housing prices in 70 Chinese cities jumped 12.8% in April despite the controls, the statistics bureau said.

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