China's inflation rate falls, Japan's current account surplus edges up

China and Japan seem to be coping quite well with their large foreign exchange reserves.

Those who worry that China's currency peg amid high economic growth rates may be causing inflation have less reason to worry now. The National Bureau of Statistics reported today that China's consumer inflation rate for April was 1.8 percent year-on-year. It is the lowest figure so far this year and compares with a 2.7 percent rise in March.

Meanwhile, Japan is becoming more reliant on its investment income to sustain its current account surplus growth. Despite an 8.5 percent fall in its trade surplus, Japan's current account surplus in March rose 0.5 percent from a year earlier, according to the Finance Ministry. This was its first gain in three months and was mainly due to a gain in income from investments in foreign bonds and stocks. Exports were up 6.5 percent from a year earlier while imports jumped 11.8 percent due to soaring oil prices.

The analysts quoted by AFP do not seem too optimistic about the outlook for Japan's exports. Daiwa Institute of Research senior economist Junichi Makino said that "Japan's exports are most likely to stagnate at least" for a while. UFJ Institute senior economist Tomomichi Akuta said: "In the face of slow demand in Asia and a slump in the European market, Japanese exports will likely remain flat in the months to come."