Lower prices have released some pent-up demand and sparked a surge in sales activity as the total area of sold houses grew 17.5 percent year on year in the first four months of this year. The credit expansion this year has significantly eased the financial distress of real estate developers and delivered a boost to the markets. From January to April, the country's total property development investment climbed 4.9 percent over the previous year.

The real estate market is edging toward recovery on the back of real demand and government revitalization efforts, which are healthier and more sustainable than the speculative boom in 2007, Gu Yunchang, Deputy Director of the China Real Estate Association, said in a statement.

Foreign Trade

China's exports continued to fall in April year on year, but stabilized in the short term.

They plunged 22.6 percent year on year in April, following a 17.1-percent decline in March and a 21.1-percent decline in January and February, according to NBS.

The April export figure was worse than market expectations, but the 23-percent year-on-year import decline was in line with expectations. Trade surplus came in at $13.1 billion.

Though trade figures dropped year on year, they picked up momentum in April compared with March.

From March to April, exports rose 6.9 percent and imports rose 15.1 percent. The big import jump was due partly to China's efforts to balance foreign trade by importing more from other countries or regions, such as its European buying spree.

But experts warned the sprawling financial crisis has not ended yet. The economies of China's biggest trade partners like the European Union, Japan and the United States are still in the doldrums, leading to less demand for Chinese goods.

Bank Loans

After soaring to a record high of 1.89 trillion yuan ($277 billion) in March, new loans in April plummeted to around 600 billion yuan ($87 billion).

The government target for new loan growth this year was 5 trillion yuan ($732 billion), but bank loans have already exceeded that number. Many economists suspected new loans would jump to 9 trillion yuan ($1.3 trillion) for 2009.

In response to the credit crunch, this year the Chinese Government ditched its stringent monetary policy in favor of a moderately accommodative one in an attempt to inject more liquidity into the market. It directly gave rise to bank loan surges in the first quarter of this year.

"It's time to slow down," Zhuang Jian, an economist at Asia Development Bank, told China Securities Journal. "Credit growth should be brought back to normal."

Zhuang warned that the surge in loans might bring heavy inflation pressure to the economy unless they are confined to a normal level.

In addition, at a time of both internal and external economic uncertainties, it is questionable whether the loans were issued to the right companies-some might fall into the category of non-performing loans if risk-control measures were not sufficient enough, Zhuang said.

Restricting Iron and Steel Production

Faced with soaring iron and steel investment, an industry watchdog sent to all major manufacturers a notice deemed the "severest correction decree," ordering them to control steel production and urging banks to stop making loans to steel mills that blindly expand production.

In early May, the Ministry of Industry and Information Technology issued an urgent notice on restraining the excessive growth of iron and steel output. The ministry is in discussions with the Central Government on setting up a fund to encourage the elimination of outdated production capacity.

Overcapacity has long plagued the country's steel industry, as it led to vicious price competition and reduced China's say in iron ore prices. The notice said 25 to 30 percent of iron and steel output is excessive and about 4.7 billion tons of steel is needed this year to fulfill domestic and export demand.

"There are no effective signs showing a strong iron and steel industry recovery," said Shan Shanghua, Secretary General of the China Iron and Steel Association, because the downstream property and equipment manufacturing industries have not yet recovered.