Home Headline News China in Strong Rebound

Chinese factory prices hit a more than two-year high in March, data showed Friday, highlighting the country’s strong recovery but feeding concerns it could filter through to the global economy just as central banks battle to maintain ultra-loose monetary policies and low interest rates.

Having largely navigated the pandemic crisis early last year, the Asian powerhouse has enjoyed months of improvement across the board and was the only major economy to expand in 2020.

And now the rollout of vaccines in major markets is gathering pace, demand for China’s goods continues to rise, putting upward pressure on prices in the world’s biggest exporter.

China’s producer price index (PPI), which measures the cost of goods at the factory gate, expanded a forecast-beating 4.4 percent on-year last month, the National Bureau of Statistics said.

The figure was “due to factors such as rising international commodity prices” including crude oil and iron ore, and boosted by an “increase in domestic industrial production and investment demand”, said NBS senior statistician Dong Lijuan.

Analysts had expected the rise in PPI given the low base of comparison last year, when lockdowns and strict movement controls were imposed to stamp out Covid-19.

Observers said that with China the leading exporter in the world, the rises could cause a headache for global central banks, which are already trying to temper worries that an expected surge in economic activity this year will fan inflation and force them to wind back their accommodative monetary policies.

But Nomura chief China economist Lu Ting noted that this time, surging commodity prices have been “mainly driven by monetary easing and huge fiscal stimulus — especially in the US — outside China”.

“As the world’s largest exporter of manufactured goods, higher PPI inflation in China will be inevitably passed to other economies,” he said.

– US bond yields up –

The Federal Reserve has led the pack in pledging repeatedly that even if inflation does spike, it will not lift its record low interest rates until the US economy is back on track. Still, investors are not totally sold, and yields on US Treasuries — a gauge of future rates — are sitting near one-year highs.

Raymond Yeung at Australia and New Zealand Banking Group added: “Our research has found that China’s PPI has a high positive correlation with (consumer prices) in the US.

“The higher-than-expected PPI data could impact people’s judgement of inflation pressure in the US and globally, and this impact shouldn’t be underestimated.”

China’s economy has bounced back since authorities brought the virus outbreak largely under control, with leaders setting a 2021 growth target of above six percent and a mass vaccination campaign underway.

The International Monetary Fund this week raised its growth forecast for China to 8.4 percent as well, after the world’s second largest economy became the only major one to expand last year.

Official data Friday showed China’s consumer price index (CPI) rose 0.4 percent on-year in March, with prices of some food items such as fresh fruit growing but that of pork dropping.

China’s CPI, a key gauge of retail inflation, had in recent years been driven up by pork prices after an African swine fever outbreak ravaged stocks.

This has since stabilised with officials working to boost supplies of the country’s meat staple.

You may also like


Your Trusted Source for Capital Markets & Related News

© 2023 LiveTradingNews.com – For The Traders, By The Traders – All Right Reserved.

The information contained on this website shall not be construed as (i) an offer to purchase or sell, or the solicitation of an offer to purchase or sell, any securities or services, (ii) investment, legal, business or tax advice or an offer to provide such advice, or (iii) a basis for making any investment decision. An offering may only be made upon a qualified investor’s receipt not via this website of formal materials from the Knightsbridge an offering memorandum and subscription documentation (“offering materials”). In the case of any inconsistency between the information on this website and any such offering materials, the offering materials shall control. Securities shall not be offered or sold in any jurisdiction in which such offer or sale would be unlawful unless the requirements of the applicable laws of such jurisdiction have been satisfied. Any decision to invest in securities must be based solely upon the information set forth in the applicable offering materials, which should be read carefully by qualified investors prior to investing. An investment with Knightsbridge is not suitable or desirable for all investors; investors may lose all or a portion of the capital invested. Investors may be required to bear the financial risks of an investment for an indefinite period of time. Qualified investors are urged to consult with their own legal, financial and tax advisors before making any investment. Knightsbridge is a private investment firm that offers investment services to Qualified Investors, Members and Institutions ONLY. Qualified Investors are defined as individuals who have met those Qualifications in the relevant jurisdictions. Members are defined as individuals who have been accepted into the Knightsbridge membership program. Institutions are defined as entities such as banks, pension funds, and hedge funds. If you are not a Qualified Investor, Member or Institution, you are not eligible to invest with Knightsbridge. All investments involve risk, and there is no guarantee of profit. You may lose some or all of your investment. Past performance is not indicative of future results. Knightsbridge is not a registered investment advisor, and this disclaimer should not be construed as investment advice. Please consult with a qualified financial advisor before making any investment decisions. By accessing this website, you agree to the terms of this disclaimer. Thank you for your interest in Knightsbridge.