Xinhua Finance/Milken Institute RPI Update: Growth in China's Foreign Reserves Continues to Drive Up RPI in December

Xinhua Finance/Milken Institute RPI Update: Growth in China's Foreign Reserves Continues to Drive Up RPI in December

March 23, 2007

    SHANGHAI, China, March 23 /Xinhua-PRNewswire/ -- 

    Indicator Value Change

     December 2006:         194.1
     November 2006:         192.2
     Month-to-month change: 0.99%
     December 2005:         175.9
     Year-to-year change:   10.33%

    (Logo: http://www.xprn.com.cn/xprn/sa/200611140926.gif
)

    Click
http://www.xinhuafinance.com/en/charts/ipo_rpi/0703/rpi_chart1_b.jpg
 to download the chart. 

    Highlights 

    In December 2006, the month-to-month percentage change
in the Renminbi Pressure Indicator (RPI) was 0.99 percent.
China's foreign exchange reserves rose to US$1.07
trillion.

    Analysis 

    The RPI rose by 0.99 percent, from 192.2 to 194.1 in
December. The gain was attributable to appreciation of the
yuan and an increase in foreign exchange reserves, which
increased nearly US$27.6 billion from November.  The rate
of yuan appreciation against the U.S. dollar slowed to 0.31
percent, from 0.59 percent in November, while growth in
China's foreign exchange reserves also slowed to 2.67
percent, from 2.89 percent.  Of the 0.99 percent growth in
RPI, the yuan appreciation accounted for a 0.10 percentage
point increase, and growth in reserves contributed the
remaining 0.89 percentage point increase.  There was no
change in domestic interest rates. In January and February
2007, the rates of yuan appreciation against the dollar
grew to 0.40 and 0.47 percent, respectively.  Outlook: With
the likelihood of further appreciation, build-up in foreign
exchange reserves and increases in interest rates, the RPI
should continue to increase.

    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 were launched in
November 2006: the Renminbi Pressure Indicator, the Chinese
IPO Indicator, and the Market Adjusted Debt (MAD) Indicator.
The remaining indicators will be launched in 2007. 

    Time Period Coverage and Frequency

    The indicator covers the period from November 30, 1980,
through December 2006. 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 . 

    Xinhua Finance Limited is China's unchallenged leader
in financial information and media, and is listed on the
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Company is headquartered in Shanghai with 20 news bureaus
and offices in 19 locations across Asia, Australia, North
America and Europe. For more information, please visit
www.xinhuafinance.com. 

    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
www.milkeninstitute.org.


    For more information, please contact:

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

     Mr. Scott Zhang
     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
     Ms. Ishviene Arora
     Tel:   [phone]
     Email: [e-mail]

    Europe
     Mr. John Dudzinsky
     Tel:   [phone]
     Email: [e-mail]

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