China’s CPI grows 1.0% in Jan
February 11, 2009
China’s consumer price index (CPI), the major gauge of inflation, has climbed 1.0% year on year in January, said the National Bureau of Statistics (NBS) on Tuesday.
The CPI climbed 0.7% in urban regions, while CPI in rural areas rose 1.5%, according to the statistics.
NBS states that the food price jumped 4.2% in 2008, while prices in the non-food sector edged down 0.6%.
The price of meat dropped 2.8% year on year, while pork is down 13.3%. The price of edible oil dropped 13.9% from a year earlier. There was an 11.6% increase in the price of aquatic products, a 3.9% increase in the price of grains, and a 19.6% surge in the price of vegetables.
NBS also announced that China’s producer price index (PPI), the index for industrial products, went down 3.3% in January, and fell 2.2 % compared with last December.
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December 14, 2008
Producer price index is properly called as “factory gate index” because it is a gauge for the prices of producers. So those who make trade with China is better to give an eye on the PPI to forecast the behavior of short-term prices of producers. PPI is also reflects the direction of production costs level because the cost is a major of input of prices.Here is the news about the recent data about PPI:
CHINA’S producer inflation will fall markedly in December, increasing the possibility of deflation.
The producer price index (PPI) fell to 2 percent in November, down from 6.6 percent in October, reaching the slowest pace since May 2006, as prices in fuel and commodities declined.
“The PPI drops more sharply than consumer inflation during an economic slowdown and this will mercilessly drag down consumer prices.
Many major world economies have entered into a recession and this had a big impact on China.
“It’s a fairytale to think China will remain immune from what’s happening in the rest of the world.”
Emerging economies face bigger challenges, including faltering external demand and outflow of capital.
Lenders should extend more loans to energy-saving and environmentally friendly sectors and help industries upgrade while improving risk control.
The CBRC targets a lower non-performing loan ratio next year, but it will “scientifically tolerate” any increases in the stockpiles of bad loans.
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As Inflation Falls,Time to Support Growth
October 19, 2008
As we frequently emphasized in our posts and told our clients, Chinese government was waging a war against inflation by tightening monetary policies which widely hurts exports of China. Now with the August inflation lowered to %4.9, China rapidly moved to support growth again:
It’s time for China to boost growth  (By Wang Yanlin, Shaghai Daily Newspaper)
IN the first eight months of the year, the government’s top priority, while framing macro economic policies, was the fight against inflation. But there has been a slight shift in emphasis.
Last Monday when Vice Premier Wang Qishan delivered a speech at the 12th China International Fair for Investment and Trade in Xiamen, Fujian Province, he said the current goal of the government was to “realize a stable and relatively fast economic growth” and “put the rising inflation under control.”
This is possibly the first time that “spurring growth” has been put higher on the agenda than “curbing inflation” by a heavy-weight government official during a formal business occasion this year.
Policy makers are usually very circumspect while commenting on policy issues in public. So is Wang’s public stance an indication that top decision makers could be considering the odds of adjusting macroeconomic policies? This may well be so.
Economists and analysts have been urging the government to shift focus from taming inflation to supporting growth.
The newly released economic data show China’s gross domestic product has slowed to 10.1 percent in the second quarter, down from 10.6 percent in the first three months and 11.9 percent last year.
The Consumer Price Index, the main gauge of inflation, grew at 4.9 percent in August – the slowest pace in 14 months. It has been on the decline for four consecutive months and the speed at which inflation eased went beyond economists’ boldest expectations.
Industry slowing
In contrast to the softening inflationary pressure, the risk of slower economic growth is intensifying.
In August, industrial production grew 12.8 percent, the slowest since February last year.
Among the sectors which dragged down output was the automobile industry, which used to be a major growth driver. The automobile sector fell 3.3 percent last month.
Exports, another key element of overall economic expansion, rose 21.1 percent in August, cooling down from a 22.9-percent jump a month earlier.
The slower growth came despite the government increasing export tax rebates for textiles and garments – the two sectors hardest hit by yuan appreciation and weaker demand from developed markets.
China’s urban fixed-asset investment increased 27.4 percent in the first eight months, keeping a stable growth momentum. But analysts said this was mainly bolstered by the demand created by the May 12 earthquake in Sichuan Province.
On the other hand, domestic consumption looks robust. Retail sales in August jumped 23.2 percent, slightly up from the July figure which saw the fastest rise since 1996.
However, the rest of the year may see a downturn with no new strong selling points, like the housing and automobile sectors of the past, to boost growth.
All figures now seem to point in one direction °?- that the government should take concrete steps to sustain economic growth. Huang Yiping, an economist with Citigroup, said the CPI which fell below 5 percent in August could help shift the balance of policy concerns toward growth.
Sops may work
“The probability of a policy reversal may rise significantly in the coming months, as global economic conditions continue to deteriorate and domestic corporate sectors increasingly feel the impact of growth slowdown,” said Huang.
“Although the People’s Bank of China has so far maintained its bias toward tight monetary policies, it has introduced a number of measures to fine-tune trade policies as well in recent months,” he added.
The analyst said that the central bank’s steps include expansion of credit quota, slowdown of currency appreciation and increases in export tax rebates.
“This shift in policy concerns should be reinforced to keep the CPI at a healthy level,” Huang noted.
But there is a major hurdle in the way of a complete turnaround as producer prices, the factory-gate inflation measure, also keep going up.
The Producer Price Index in August soared to 10.1 percent, the highest in 12 years. Rising factory-gate costs are generally passed on to the end users, but this may in turn affect consumer prices, analysts said.
Economists suggest China should continue with its fine-tuning measures for the time being. Relaxing the credit quota, slowing down yuan appreciation and selected reduction of tax burden could go a long way to boost the economy.
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China’s PPI rises 10% in July
August 12, 2008
– The producer price index (PPI) for China’s industrial products rose 10.0 percent year on year in July, the National Bureau of Statistics said on Monday.
The double-digit growth of PPI, which measures the value of finished products when they leave the factory, was the highest since 1996.
The PPI jumped 8.0 percent year on year in the first seven months, compared with 7.6 percent in the first half this year, said the NBS.
The purchaser prices for raw materials, fuel and power rose 15.4 percent in July, compared with 13.5 percent in June.
Source: XINHUA
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Economy may grow 10.2% in Q3
August 8, 2008
CHINA’S economy may expand 10.2 percent in the third quarter, slightly higher than the 10.1 percent increase in the second quarter, the State Information Center predicted today.
The Consumer Price Index, the main gauge of inflation, may rise 6.6 percent through September, down 1.3 percentage points from the figure in the first half, said the research unit under the National Development and Reform Commission, the nation’s top planner.
“China’s economy will grow in a stable manner in the third quarter and the pace of price increases will slow down,” said analysts with the center in a report.
However, production costs will mount in the following months and add more pressure on companies, especially small- and medium-sized enterprises.
In June, the Producer Price Index, the factory-gate inflation gauge, rose to a 12-year high of 8.8 percent.
The center suggested the government provide more tax breaks for companies and encourage them to introduce more technology to digest the pressure brought by cost increases.
“The government should expand corporate subsidies and charge less in administrative fees to help companies weather the challenge,” said the report.
For example, the toll fee can be reduced to mitigate transport expenditures. To those pioneers in innovation or using new equipment to cut costs, the government can consider more tax breaks for them, it said.
In the first half, China’s fiscal reserves amounted to 1.19 trillion yuan (US$173.4 billion), making it possible for the government to adjust tax policies to bolster economic growth.
Meanwhile, China should make more efforts to increase supply and prevent price increases from growing into a deeply entrenched one, instead of mainly food-driven.
China should also choose “good timing” to raise prices of energy-related products and adopt economic measures to guarantee the production of daily necessities and those needed for the reconstruction in earthquake-hit areas.
Source: Shanghai Daily
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