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”.
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 »
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 earlier. Continue 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 »
While China’s headline inflation rate fell again in December to 4.1 per cent, a small rise in food prices suggests the inflation battle is not yet over. Cui Li, chief China economist at RBS, talks to Josh Noble of beyondbrics.
Beijing will speed up the monetary easing and try to boost economic growth following drops in China’s annual inflation rate and industrial production growth in November.
That’s the view of the analysts reading Friday’s numbers. But they’re divided as to how far and fast the authorities will go in the face of a global crisis which, for the moment, doesn’t look as serious as 2008. Continue reading »
Beijing’s 50 basis point cut in reserve requirements for all China’s banks was a decisive shift in monetary policy and one that is set to continue into 2012. But confusing this round of easing with the enormous stimulus package unrolled in 2009 would be a mistake. Continue reading »
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