China inflation

By Guonan Ma, Bruegel

Against a backdrop of weakening domestic demand, and in the slipstream of a major debate about whether Chinese monetary policy in the last year has been too restrictive, there have been definite signs of Chinese monetary loosening in recent weeks. This makes sense. Timely and measured monetary easing will support growth, facilitate structural rebalancing and underpin rapid economic reform.

There is little doubt that Chinese growth has been losing momentum. During the past few quarters there were clear signs of rising inventories, slumping property sales, producer price deflation, declining consumer price inflation, weakening corporate earnings, slowing investment and anaemic industrial production. Fortunately, private consumption is still holding up. Continue reading »

Is China’s recovery underway? What do all the recent numbers mean?

Beyondbrics brings you a few pointers to the batch of Chinese economic data, and what the commentators think. Continue reading »

From the numbers alone, it’s not immediately clear what’s good or bad about China’s inflation data out on Tuesday.

The year on year June figures show consumer prices are up 2.7 per cent, a rise from 2.1 per cent annual inflation in May. That doesn’t sound too bad, does it? After all, China’s aim is for inflation to be 3.5 per cent 2013. But what is pushing inflation up? Food – particularly pork prices – and property. This isn’t the type of demand that China wants. Continue reading »

After what looked like a troubling surge in inflation in February, China’s CPI figure has dropped back sharply in March.

The February figure of 3.2 per cent had prompted a warning from central bank governor Zhou Xiaochuan in March that China should be on “high alert” over rising inflation. In which case, the March data should settle the nerves. But does the low figure show a weaker-than-expected recovery? Continue reading »

Does Chinese industry need more inflation?

The question might seem absurd for a fast-growing developing economy but with consumer prices increasing at just two per cent, Gavekal Dragonomics, the China economic research consultancy, is arguing that inflation is “more a friend than a foe.” Continue reading »

China’s consumer price inflation fell to a 30-month low of 1.8 per cent in July. Factory-gate inflation was even weaker, with producer prices falling 2.9 per cent. As Simon Rabinovitch wrote in the FT, combined with slowing industrial production and retail sales, it’s a “sluggish start to the second half of the year”.

Will this prompt further monetary easing? Continue reading »

Front page stories about a looming food crisis have particular resonance at the moment for China. Just when Beijing is trying to engineer a soft landing for the economy, and stimulate some growth in the second half of the year, the spectre of price rises is back.

Aside from the usual concerns about the social impact of higher food prices, there is understandable concern that China’s easing may also hit another buffer. Continue reading »

Chinese policy makers spend a lot of their time worrying about inflation. But the growing risk now appears to be deflation.

Official data released on Monday show that the consumer price index rose 2.2 per cent in June from a year earlier, down from 3 per cent in May. But as our charts show, key indicators such as money growth and producer prices suggest that CPI has much further to fall. Continue reading »

Chinese stocks fell sharply on Monday after Beijing released figures showing year-on-year inflation fell to 2.2 per cent in June, from 3 per cent in May, the lowest since January 2010.

The Shanghai composite index closed 2.4 per cent down in its biggest drop in a month and the Hang Seng traded 1.5 per cent lower. The fall has prompted talk of further easing, even after China cut its benchmark rate to 6 per cent last week in a surprise move. The Xinhua news agency quoted premier Wen Jibao talking of “aggressive efforts to preset and fine-tune economic policies”. Continue reading »

Maybe it was all just wishful thinking. Analysts who said Chinese growth hit bottom in Q1 look to have been proved wrong, after a raft of miserable data from the world’s second largest economy showing that things are getting even worse.

Everything is falling. Continue reading »

Chinese inflation is up again, imports are down again and export growth looks tepid. These and other puzzling data have put China back in an old bind: how to support growth without unleashing the dragon of inflation. Continue reading »

By Ben Simpfendorfer of Silk Road Associates

The rise of the emerging world’s middle-class offers the promise of a new global growth driver at a time when American and European households are spending less.

It’s also popular to imagine the rise as a straight-line trajectory buoyed by surging sales of Louis Vuitton bags and Audi sedans.

Yet the reality is often very different, especially in China where parts of the middle class are a mile wide, but an inch deep. Continue reading »

The most lucrative investment strategy in China? Go long vegetables – just be sure to pick the right one.

After the prices of garlic, mung beans and corn spiked at different times over the past few years, the humble onion is now getting its day in the sun. Chinese green onions, which resemble leeks and are a stir-fry staple, cost about Rmb7 ($1.10) per kilogram these days, five times more than a year earlierContinue reading »

Oil futures declined on the news that China’s export growth rate was slowing based on data released over the weekend. This might seem good news for inflation in India and China but don’t celebrate just yet: the respite is likely to be short-lived.

Frederic Neumann, an HSBC economist, argues that oil prices drifting higher – currently at about $106 per barrel – feeds eventually into higher prices for food through higher transportation and fertiliser costs. Continue reading »

China’s low inflation number for February has given the market something to cheer. Price pressures are easing, and so the great Chinese credit taps can heave back into life.

But don’t get too carried away – the data still looks pretty inconclusive.  Continue reading »