Xinhua Finance/Milken Institute Renminbi Pressure Indicator Update: March RPI Growth Slows Slightly, Trade Surplus Continues to Widen

Xinhua Finance/Milken Institute Renminbi Pressure Indicator Update: March RPI Growth Slows Slightly, Trade Surplus Continues to Widen

June 27, 2007

    SHANGHAI, China, June 27 /Xinhua-PRNewswire/ -- 

    (Logo: http://www.xprn.com.cn/xprn/sa/200611140926.gif
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    Indicator Value Change
     March 2007: 202.7
     February 2007: 200.1
     Month-to-month change:1.30%
     March 2006: 180.2
     Year-to-year change: 12.46%
 
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    Highlights 

    In March 2007, the Renminbi Pressure Indicator (RPI)
score increased by 1.30 percent as China's foreign exchange
reserves rose to US$1.20 trillion.  The interest rate rose
0.27 percentage point as the government tried to slow down
investment growth.

    Analysis 

    Yuan appreciation and mounting foreign exchange
reserves continued to push the RPI higher in March to
202.7, or 1.30 percent over the previous month.  Foreign
exchange reserves rose by US$44.7 billion in March, which
reflected a 50 percent increase in China's trade surplus in
February.  This was the second-largest value increase since
the revaluation of the yuan in July 2005.  For the period,
the increase in foreign exchange reserves accounted for
1.28 percentage points, while exchange rate appreciation
accounted for 0.02 percentage point.  In regards to the
April and May values, although foreign exchange reserves
are not yet known, the monthly yuan appreciation rate grew
to 0.40 and 0.69 percent, respectively (from 0.07 percent
in March), while the interest rate was unchanged.  The
trade surplus declined to $6.9 billion in April before
growing to US$16.8 billion in May.  Despite the 8.18
percent yuan appreciation since July 2005, the growth in
trade balance and foreign exchange reserves has shown no
sign of slowing down and will likely continue to drive the
upward movement in the indicator.  

    Methodology 

    The RPI is based on a monthly examination of the
interaction between the     following variables to compute
overall cumulative exchange rate pressure: the percentage
change in the spot exchange rate, the percentage change in
foreign exchange reserves, and the change in domestic
interest rates.  The indicator measures the pressure on
China's currency relative to the U.S.  dollar.  It is set
equal to 100 on January 1, 2000.  Increases in the RPI
reflect appreciation pressure on the renminbi (RMB).  

    Xinhua Finance/Milken Institute China Indicators 

    The Xinhua Finance/Milken Institute China Indicators
are aimed at providing investors, analysts, and financial
professionals deeper insight into China's money and capital
markets.  Three of the eight indicators¨Dthe Renminbi
Pressure Indicator, the Chinese IPO Indicator, and the
Market Adjusted Debt Indicator¨Dwere launched in November
2006.  A Banking Strength Indicator and Adjusted Trade and
Finance Indicator were launched in April 2007.  The
remaining indicators will be launched later this year.  

    Time Period Coverage and Frequency

    The indicator covers the period from November 30, 1980,
through March 2007.  Data are available from the Milken
Institute upon request.  There will be a two- to four-month
delay in reporting values for the indicator, depending on
the release of information from authorities in China.  

    Sources of Data 

    The data used in the construction of the indicator are
obtained from the International Monetary Fund, People's
Bank of China, and State Administration of Foreign
Exchange.  

    To view additional information, visit
http://www.xinhuafinance.com/indicators and
http://www.milkeninstitute.org/chinaindicators .  

    About Xinhua Finance Limited

    Xinhua Finance Limited is China's premier financial
information and media service provider and is listed on the
Mothers Board of the Tokyo Stock Exchange (symbol: 9399)
(OTC ADRs: XHFNY).  Bridging China's financial markets and
the world, Xinhua Finance serves financial institutions,
corporations and re-distributors through five focused and
complementary service lines: Indices, Ratings, Financial
News, Investor Relations, and Distribution.  Founded in
November 1999, the Company is headquartered in Shanghai
with offices and news bureaus spanning 11 countries
worldwide.  For more information, please visit
http://www.xinhuafinance.com .  

    About the Milken Institute

    The Milken Institute is a nonprofit, independent
economic think tank whose mission is to improve the lives
and economic conditions of diverse populations around the
world by helping business and public policy leaders
identify and implement innovative ideas for creating
broad-based prosperity.  The Milken Institute has extensive
expertise in China and conducts ongoing research on China's
banking and capital markets.  It is based in Santa Monica,
Calif.  For more information, please visit
http://www.milkeninstitute.org .



    For more information, please contact: 

    Xinhua Finance 
     China 
     Ms. Joy Tsang
     Tel: [phone]
     Email: [e-mail]

     Japan 
     Mr. Jiong Sun
     Tel:   [phone] 
     Email: [e-mail] 

    Taylor Rafferty (Media contact for Xinhua Finance) 
     Japan 
     Mr. James Hawrylak
     Tel:   [phone]
     Email: [e-mail]
   
     United States
     Mr. John Dudzinsky
     Tel:   [phone]
     Email: [e-mail] 

     Europe
     Faisal Kanth
     Tel:   [phone]
     Email: [e-mail]

    Milken Institute 
     Ms. Jennifer Manfre, Associate Director of
Communications 
     Tel:   [phone]
     Email: [e-mail]