The Wall Street Journal, the Financial Times and the South China Morning Post all led their online China business coverage with the release of April inflation numbers by the National Statistics Bureau. The WSJ relies on an AP feed, while the FT gets its wire news via Reuters. China's consumer price index rose by a near decade-high 8.5% year-on-year in April, faster than March's 8.3% gain and just short of February's 12-year high of 8.7%. Food prices rose just 22.1%, fueled by a 68.3% jump in the price of pork, 46.6% in cooking oil and 13.6% for fresh vegetables. April's nonfood inflation was unchanged from March at 1.8%. However, that was the highest increase in more than a year after staying below 1% for the previous two years. Producer prices rose 8.1% in April, driven by rising energy costs.

The government also reported Monday that China's trade surplus fell about 1% in April from the same time last year to US$16.8 billion. The trade surplus with Europe jumped by 34.8% to $12 billion while the surplus with the US rose just 4% to $13 billion, according to the Chinese customs agency.

China's central bank responded to the figures Monday by ordering banks to set aside more reserves to curb a boom in lending, the WSJ added. The People's Bank of China said banks must increase the amount they hold in reserve by half a percentage point to 16.5% of their deposits from May 20. According to a notice posted on the central bank's web site, the move was "aimed at strengthening liquidity management in the banking system and steering reasonable growth in bank credit". China has repeatedly increased the reserve ratio over the past two years to curb rapid growth in lending, which regulators worry could lead to a financial crisis.

The Financial Times gave extensive coverage to China’s panda diplomacy with Japan as President Hu Jintao made the first trip to Japan by a Chinese head of state in a decade. Hu seized the opportunity of the recent death of Ling Ling, the only panda belonging to Tokyo’s Ueno Zoo, to offer replacement pandas, officially delighting the government but drawing bemusement from others. Akiko Domoto, the governor of Chiba prefecture said “we shouldn’t be fooled by these pandas”, drawing attention instead to food safety and the potentially dangerous boundary dispute over the gas-rich waters of the East China Sea. The US$1 million rental fee for the pandas also raised eyebrows. In an editorial commentary, the Times said real progress has been made over the last two years but issues still exist, most notably over energy resources in the East China Sea. The commentary singled out Hu’s assurances that an agreement to jointly exploit oil and gas resources in the East China Sea was “in sight” and that Sino-Japanese relations were “at a new historic starting point”.

Morgan Stanley announced Monday it had raised a US$4bn private equity fund dedicated to infrastructure projects. The FT reports that up to a quarter will be earmarked for developing markets. It gives no analysis of the implications for China, but the bank has an office in Beijing and Sadek Wahba, chief investment officer and global head of Morgan Stanley Infrastructure, noted its banking and client relationships in countries such as China and India would help find opportunities and finance deals. Infrastructure is now one of the hottest asset classes as investors seek to move funds away from the credit crunch and the US economic slowdown

China is also getting on the infrastructure bandwagon. The Times reported over the weekend on a controversial US$9.25 billion agreement between the Democratic Republic of Congo and China for millions of tonnes of copper and cobalt in exchange for roads, railways and other infrastructure. The deal, finalised last month, secures 10.62 million tonnes of copper and 620,000 tonnes of cobalt for resource-hungry Chinese industries. In exchange, China will build major routes linking the mineral-rich south to ports in the west of the country and connect the north to the south. Sinohydro and China Railway Group are among the Chinese companies linked to the agreement.

The Wall Street Journal reports that two more mainland companies have been added to Hong Kong’s Hang Seng index at the expense of PCCW Ltd and Cheung Kong Infrastructure Holdings Ltd, two of Hong Kong's best-known companies. Tencent Holdings Ltd and Aluminum Corp of China Ltd will take their places effective June 10. The number of stocks in the index will remain at 43.

The research department of the Ministry of Commerce said mainland enterprises have accumulated US$100 billion in unpaid bills from overseas buyers, and this is increasing at an annual rate of US$15 billion. Many of the defaulters were from the US, the South China Morning Post reported as a result of the ongoing subprime crisis. The number of US debtors who failed to pay their Chinese suppliers on time doubled in the first quarter year-on-year, the ministry said

Overseas investments made by China in the first quarter of the year totalled US$19.3 billion, already more than for the whole of last year, vice-minister of commerce Chen Jian told delegates at an investment forum in Beijing. Chen said investments abroad had risen sevenfold in the past five years from US$2.5 billion in 2002 to US$18.76 billion last year. The figures make China the world's 13th biggest overseas investor last year, up from 26th the year before, and the biggest among developing countries. The SCMP bases its story on Chinese media reports but also takes a look at some of the biggest overseas investment deals of the past year. These include the accumulation of an almost £1 billion (HK$15.35 billion) stake in British oil giant BP by the investment unit of the State Administration of Foreign Exchange and the HK$26.34 billion March raid of half of Fortis Group's asset management business by the mainland's second-largest insurer, Ping An Insurance. China Investment Corp (CIC), the US$200 billion state investment fund, paid US$5 billion in December last year for a 9.9% stake in Morgan Stanley after spending US$3 billion for a 9.3% stake in Blackstone Group's initial public offering in June. More investments are likely in the wake of the US subprime crisis, as these comments from fellow assistant commerce minister Fu Ziying last month suggest.

Finally, the Post reports on Beijing Automotive Industry Corp’s talks with Daimler-Benz, its 50-50 joint-venture partner in the assembly of mainland-distributed Mercedes-Benz vehicles, to develop cars under its own label. Beijing Automotive, the fifth-largest domestic carmaker by sales, was planning a share sale to raise capital to fund its plans, company chairman Xu Heyi said.

Today’s Papers covers key China business stories carried by major international and Chinese dailies, sourced from their web editions. It concentrates on original stories rather than wire news. Other news and breaking stories are carried on The China Perspective's homepage or in the Daily Briefs section.