Spotlight: Inflation in China
In the News-China Raises Bank Reserve Requirement Ratio by 50 Basis Points
Xinhua, March 18
“The People's Bank of China (PBOC), China's central bank, announced Friday to raise the bank reserve requirement ratio by 50 basis points from March 25.” Read more
In the News-China's Central Bank Keeps 3-Month Bill Yield Unchanged, Calming Rate Hike Expectations
Xinhua, March 18
“The People's Bank of China (PBOC), or the central bank, auctioned 50 billion yuan ($7.61 billion) of three-month bills at a yield of 2.7944 percent on Thursday, temporarily easing speculation of an approaching interest rate hike.” Read more
In the News-Banker Confidence Up
Global Times, March 17
“Bankers were more confident of the economic outlook in China in the first quarter, indicated a central bank's survey released Wednesday.” Read more
In the News-Forex Quota Hike Denied
Global Times, March 17
“The State Administration of Foreign Exchange (SAFE), China's foreign exchange regulator, Tuesday denied media reports saying that China would substantially lift the annual quota allowed for individuals when buying foreign exchanges.” Read more
Analysis- Louis Kuijs: China’s Food Prices – Why Have They Trended Up and What Lies Ahead?
Worldbank.org, March 16
“Food prices have received a lot of attention recently. Understandably, much of the attention is on recent developments and short term prospects. But in this blog post I try to look back at some longer term trends, in order to look further ahead.” Read more
In the News - Producer Prices Rise at Fastest Pace in 18 Months
Reuters, March 16
“Producer prices surged in February at their fastest pace in about 18 months, lifted by high food and energy prices, according to a government report on Wednesday that pointed to a buildup in inflation pressures.” Read more
In the News- Govt to Prolong Inflation Fight
Global Times, March 15
“New bank loans tumbled in February, sliding to 535.6 billion yuan ($81.5 billion), down from the 1.04 trillion yuan ($158 billion) seen in January, the central bank announced Monday, showing the market's response to government efforts to address inflation.” Read more
In the News-PBOC says Forex Policy Not Main Anti-Inflation Tool
Global Times, March 14
“Zhou Xiaochuan, governor of the People's Bank of China (PBOC), said Friday that the country's exchange rate policy was one of several tools used to battle inflation, but not the main one.” Read more
In the News-Inflation 4.9% for February
China Economic Review, March 11
“China's consumer price index (CPI) recorded a 4.9% year-on-year increase in February, slightly higher than analyst estimates, Bloomberg reported.” Read more
In the News-China's February PPI Growth Accelerates to 29-month-high of 7.2 Pct
Xinhua, March 11
“China's producer price index (PPI), a major measure of inflation at the wholesale level, rose 7.2 percent in February from a year earlier, the highest level since October 2008, the National Bureau of Statistics (NBS) announced Friday.” Read more
In the News-China's CPI Rises 4.9 Pct in Feb., Government Confident of Taming Inflation
Xinhua, March 11
“China's consumer price index (CPI), a main gauge of inflation, rose 4.9 percent year on year in February, the National Bureau of Statistics (NBS) announced Friday.” Read more
What They’re Saying - Exchange Rate Policy Not Major Tool to Tame Inflation
Central Bank Governor Zhou Xiaochuan, March 11
“The exchange rate policy is not a major tool for China to tame inflation, central bank governor Zhou Xiaochuan said Friday. Zhou made the comment in response to a question on whether China would make a one-off appreciation of the yuan to ease rising domestic price pressures.” Read more
In the News-China Rolls Out New Monetary Measure
China Economic Review, March 8
“China is replacing its bank lending targets with a policy of tightening based on a new measure of overall credit in the economy, the Wall Street Journal reported.” Read more
In the News-Wen Pledges to Stabilize Prices at NPC
China Economic Review, March 7
“Premier Wen Jiabao's opening speech at the annual National People's Congress in Beijing stressed that stemming inflation and reining in property prices are top national priorities, Bloomberg reported.” Read more
In the News-Tough Balancing Act for Officials
Global Times, March 7
“The government's top economic priority this year will be holding inflation at 4 percent, Premier Wen Jiaobao said over the weekend during the parliament's annual session.” Read more
In the News - Inflation Putting Heat on Beijing
China Daily, March 7
“It was 25 Celsius below zero when Grandpa Wen, as China's premier is affectionately known, visited the heart of the Xilingol pasture in the autonomous region of Inner Mongolia to greet herders in their homes on Chinese New Year's Day.” Read more
Also see: Inflation curbs stay as a top priority
In the News - China to Implement Prudent Monetary Policy in 2011
Xinhua, March 5
“China will implement a prudent monetary policy in 2011 and plan a 16-percent increase in the broad money supply (M2), says a government work report to be delivered by Premier Wen Jiabao at the parliament' s annual session Saturday.” Read more
In The News-Property price index scrapped
Global Times, Feb 18
“China has said it will stop publishing its much-watched national property price index - a lightning rod for public anger over soaring housing costs - and replace it with two new property indexes.” Read more
In The News-PBC denies rate report
Global Times, Feb 17
“China's central bank denied a report that it has kicked off a pilot program to liberalize bank deposit rates Wednesday.” Read more
In The News-Beijing limits home buys with government curbs
Global Times, Feb 17
“Beijing unveiled 15 guidelines on Wednesday to deter real estate speculation, including forbidding non-Beijing residents who cannot provide five years of tax documentation to buy residential properties - a move that analysts call a serious stop-gap strategy.” Read more
In The News-Beijing issues new rules to limit house purchase
Xinhua, Feb 16
“Beijing Municipal Government Wednesday issued new rules limiting the number of homes each family can buy as the government steps up efforts to cool the property market.” Read more
In The News-China's CPI up 4.9%, new loan surges
Xinhua, Feb 16
“Graphics shows China's consumer price index (CPI) rose 4.9 percent in January year on year, according to National Bureau of Statistics of China of on Feb. 15, 2010.” Read more
In The News-Interest rate liberalization
Global Times, Feb 16
“China has launched a pilot program allowing some banks to set deposit rates of their choosing, another step forward in interest rate liberalization, China Daily reported Tuesday citing sources.” Read more
In The News- CMB, city banks to pilot deposit rate liberalization
China Economic Review, Feb 15
“China has launched a trial program allowing a limited number of banks to independently set deposit rates, Reuters reported.” Read more
In The News-APEC business leaders see soaring prices as key economic challenge
Xinhua, Feb 15
“Business leaders of the Asia-Pacific Economic Cooperation (APEC) warned Tuesday that inflation will be the key economic challenge for most of the region's economies this year.” Read more
In The News- Chinese inflation hits 4.9% in January
China Economic Review, Feb 15
“China's consumer price index (CPI) rose 4.9% year-on-year in January, Bloomberg reported.” Read more
In The News-China's January CPI up 4.9%, PPI up 6.6%
Global Times, Feb 15
“China's consumer price index (CPI), a major gauge of inflation, grew 4.9 percent year-on-year in January, according to figures released by the National Bureau of Statistics (NBS) on Tuesday. The CPI figure is 0.3 percent higher than that of December.” Read more
Commentary – Fight inflation hard
China Daily, Feb. 11
“The latest interest rate hike that China announced on Tuesday was surprising only in its timing. To sustain sound and stable economic growth, Chinese policymakers must take more measures to prevent inflation from escalating further.” Read more
Commentary – Lu Zhengwei: Interest rises necessary step in controlling rampant economy
Global Times, Feb. 11
“The People's Bank of China, the country's central bank, announced the third interest rate increase since October, hiking the rate by another 25 basis points (a raise of 0.25 percentage point). The move is totally within expectations.” Read more
In The News – Curbs in more cities on purchase of residential properties
Global Times, Feb. 11
“By the end of this month, 72 cities in China are expected to tighten restrictions on residential property transactions with a view to check overheating of the housing market, the Beijing News reported on Friday.” Read more
In The News – Inflation may top 5%
Global Times, Feb. 11
“Inflation could exceed 5 percent for the first two months of the year, a government economist has warned in comments published by State media Thursday.” Read more
In The News – Food price hikes sure to impact January's CPI
Global Times, Feb. 10
“Food prices in 50 Chinese cities elevated multiple times more in a period of ten days (January 21-31) than they did in the entire first half of the month, announced the National Bureau of Statistics (NBS) Wednesday.” Read more
In The News – Rate hike sinks oil prices
Global Times, Feb. 10
“China's interest rate hike announcement Tuesday pushed down oil prices as traders foresaw an impact on Chinese demand, but the fall was countered by a weaker dollar and political uncertainty in Egypt.” Read more
Commentary – Inflation fight must come first
China Daily, Feb. 10
“The People's Bank of China (PBOC) announced on Feb. 8 that it would raise the benchmark lending and deposit rates effective from Feb. 9. The rate hike appears to be symmetric as both the benchmark 1-year lending rate and the 1-year deposit rate have been raised by 25 basis points. The PBOC also raised the demand deposit rate by 4 basis points, and aggressively raised the deposit rates of longer maturities. We think this is a de facto asymmetric rate hike, with average deposit rates rising more aggressively than market expectations.” Read more
In the News – Consumer confidence in China weakens in January due to rising inflation
Xinhua, Feb. 9
“Rising inflationary pressures caused a decline in confidence among Chinese consumers in January, traditionally a shopping season in preparation for the Chinese Lunar New Year, according to the latest consumer index issued Wednesday.” Read more
In The News – China central bank raises interest rates
China Economic Review, Feb. 9
“China's central bank raised the one-year lending rate by a quarter point to 6.06% and the one-year deposit rate to 3% on Tuesday, Bloomberg reported.” Read more
In the News – China’s central bank raises benchmark interest rate by 25 basis points
Xinhua, Feb. 9
“The People's Bank of China (PBOC), the central bank, announced Tuesday it would raise benchmark one-year borrowing and lending rates by 25 basis points beginning Wednesday.” Read more
In The News – Interest rates up again
Global Times, Feb. 9
“China raised interest rates on Tuesday, its second increase in just over six weeks, intensifying the battle against stubbornly high inflation that threatens to unsettle global markets.” Read more
In the News – China to control inflation, property market
Xinhua, Feb. 3
“As you would well know by now today is being celebrated as the first day of the Year of the Rabbit. Chinese Premier Wen Jiabao offered lunar New Year's wishes for the economy, in a statement on the People's Daily website.” Read more
Commentary: World Bank – China will need to normalize the monetary stance but there is no need to worry too much about inflation
By Louis Kuijs
"The recent rise in China’s inflation has grabbed attention of the public and policymakers alike. Consumer price inflation rose to 5.1% in November. This is higher than we are used to in China, although it is modest in an emerging market perspective. To determine the best policy response to the rise in inflation it is important to know its cause and how much inflation we should expect in the coming 12 months. It is also good to decide what an acceptable rate of inflation is for a country like China." Read more
What do you think? Is inflation something China should be worried about? If it is, what are the tools China can use to combat inflation? Join the discussion in the forum.
