Numbers of the Week

14,638 yuan

The average salary of mainland employees in the first six months stood at 14,638 yuan ($2,143), rising 12.9 percent year on year.

$300 million

China imported $300 million worth of diamonds in the first half of 2009, ranking as the third largest diamond consumer in the world after the United States and Japan.

TO THE POINT: Speculation concerning a tightened monetary policy drained the life from the buzzing Shanghai A-share market, which posted a steep drop on July 29. The central bank later reiterated its adherence to moderately loose monetary policy. The National Development and Reform Commission lowered retail diesel and gasoline prices by 3 percent in tandem with a drop in international crude oil prices. As China's economic recovery takes hold, merger and acquisition activities gathered momentum in the second quarter, and listed companies performed well in the first half. However, sales revenue under the government program of rural appliance purchase subsidies fell short of expectations due to a series of problems including complicated application procedures.

By HU YUE

Stock Nightmare

The Chinese stock markets plunged 5 percent on July 29 on rumors that banks might tighten loans in the next half of this year. It was the biggest single-day loss in eight months.

But later that evening, the central bank posted a statement on its website saying that it will continue to adhere to moderately loose monetary policy, as part of its commitment to stabilize the stock markets.

Central bank figures showed in the first half of this year commercial banks lent a skyrocketing 7.37 trillion yuan ($1.08 trillion), far outpacing the whole-year new loan target of 5 trillion yuan ($732 billion). The colossal loans triggered worries of bad loans and excessive liquidity that jacked up property and stock markets.

In the statement, the central bank said it would use a mix of monetary policies to maintain a reasonable loan structure based on market rules, and said underpinning economic recovery is its top priority.

In spite of its repeated calls for maintaining a loose policy for bank loans, the central bank has in effect taken other measures to absorb excessive money in the markets. For instance, it issued one-year central bank bills of up to 50 billion yuan ($7.3 billion) on July 9. More bills will be sold to commercial banks to stop their lending impulse.

Analysts believed the plunge was a correction because the stock markets have grown nearly 77 percent so far this year. They expected that mainland stock markets would continue to rise as long as the economy keeps growing.

Cutting Fuel Prices

The National Development and Reform Commission lowered retail gasoline and diesel prices by 220 yuan ($32.2) per ton, or about 3 percent, effective July 29. This is the second price cut this year following three consecutive price hikes from March to June.

The prices moved largely in line with international crude oil prices as a result of the new pricing regime introduced earlier this year. The authorities will take into consideration price adjustments when the moving average of international crude oil prices changes more than 4 percent over a period of 22 straight working days, according to the price-setting formula.

From June 26 to July 27, average international crude oil prices dropped 4 percent, making domestic retail prices eligible for adjustment.

Analysts believe the price cut means authorities are considering how much consumers can afford, though more or less at the expense of refineries. More importantly, it can dismiss suspicions that domestic prices will follow the international ones only when they are at an upward trend, they said.

It shows the country's lasting persistence in a more flexible pricing regime even when the international prices go down, said Dong Xiucheng, a senior economist with China University of Petroleum, in a statement.

M&A Resurgence

At a time when the Chinese economy is getting back on its feet, domestic investors are regaining their appetite for mergers and acquisitions (M&As).

The number of domestic transactions rose to 665 in the second quarter of this year, a sharp increase from 487 in the first quarter, though still short of the 854 deals in the last quarter of 2008, said a report of the renowned accounting firm PricewaterhouseCoopers (PwC).