Chinese inflation hits highest rate since 2012

China’s consumer price index — a key gauge of retail inflation — hit 3.8 percent last month, the National Bureau of Statistics said. (AFP)
Updated 09 November 2019

Chinese inflation hits highest rate since 2012

  • The consumer price index — a key gauge of retail inflation — hit 3.8 percent last month
  • Producer prices, meanwhile, saw their steepest decline in two years

BEIJING: China’s consumer prices grew at their fastest rate in almost eight years in October driven by a spike in meat prices caused by an outbreak of African swine fever, according to official figures released Saturday.
The consumer price index (CPI) — a key gauge of retail inflation — hit 3.8 percent last month, the National Bureau of Statistics (NBS) said, up from 3.0 percent in September and the highest annual rate since January 2012.
Analysts in a Bloomberg News poll had forecast a rate of 3.4 percent.
The spike has led the government to intervene to stabilize prices and guarantee supplies, according to the official Xinhua news agency.
“Chinese leaders are terrified of inflation,” Beijing-based research firm Trivium China said in a note, describing price rises as “one of the big drivers behind the 1989 Tiananmen protests.”
The inflation rate at the time of the student-led uprising stood at 18.25 percent.
Producer prices, meanwhile, saw their steepest decline in two years, sliding for a sixth straight month, hit by the trade war with the United States.
The producer price index (PPI) — an important barometer of the industrial sector that measures the cost of goods at the factory gate — contracted 1.6 percent in October from the previous year, the NBS said.
That came after prices shrank 1.2 percent in December, and represented the sharpest decline since August 2016.
Analysts in a Bloomberg poll had forecast producer prices would shrink 1.5 percent.


World Bank chief tells China it needs ‘vital’ reforms

Updated 21 min 52 sec ago

World Bank chief tells China it needs ‘vital’ reforms

BEIJING: World Bank chief David Malpass urged China on Thursday to further open up its economy and reduce state subsidies, echoing key demands made by the United States in protracted trade war negotiations.

Malpass made the remarks after a roundtable meeting with Chinese Premier Li Keqiang and the heads of other global institutions, including the International Monetary Fund and the World Trade Organization.

“I encouraged new reforms and liberalization,” he said.

Beijing is struggling to kickstart the economy, which expanded at its slowest pace for nearly three decades in the third quarter amid cooling global demand for its exports and a looming debt crisis at home.

Malpass said Beijing must resolve bilateral trade disputes and improve transparency in lending to avoid a sharp downturn on growth over the coming decades.

“China could improve the rule of law, allow the market to play a more decisive role in allocating resources including debt and investment, reduce subsidies for state-owned enterprises... and remove barriers to competition,” he said.

“It is hard to achieve but it is vital for reducing any inequality and building higher living standard,” Malpass said.

State-owned behemoths dominate lucrative sectors of China’s economy — including energy, aviation and telecommunications — where access to private players is restricted.

China’s trade partners have also long complained about the lack of an equal playing field and theft of intellectual property.

The country’s rubber-stamp parliament in March passed a foreign investment law that promises to address these issues, but local governments are still working on detailed rules needed to implement it.

Li said both domestic and foreign companies registered in China will be treated equally.

“They will have equal access to investment opportunities, equitable access to resources, legal protection in accordance with the law,” he said.

Beijing has also announced a timetable to open up its financial sector to foreign investors next year, as it attempts to woo outside capital to shore up an economy battered by the trade war with the United States.

China and the US have slapped tariffs on over $360 billion worth of goods in two-way trade.

Negotiators from both sides have been working toward a partial deal, but US President Donald Trump on Wednesday said Beijing has not made sufficient concessions, making him reluctant to conclude a bargain.

Economic data shows the uncertainty created by the trade spat between the world’s two biggest economies is undermining global growth.

IMF chief Kristalina Georgieva warned that implementing all the announced tariffs would cut $700 billion out of the world economy next year.

“What should be our priorities? First, to move from trade truce to trade peace,” she said.