The Chinese economy released a series of important fundamentals today showing that deflation risks remain threatening the economy as consumer prices continued to decline. On the other hand, today's fundamentals showed that industrial production still rebounding, while retail sales advanced on rising domestic spending.
Industrial production in China rebounded 16.1% in October from a year earlier following an incline by 13.9% and it came higher than the forecasted 15.5%. A record lending growth in addition to the government's stimulus spending helped the nation's manufacturing sector to rebound that gave optimism to exporters in other countries in the Asian region as demand for raw materials and primary goods increased.
A $2.2 trillion of stimulus spending by governments around the world helped world demand to pick up after a sharp decline followed the collapse of Lehman Brothers, while major economies are emerging from recession and markets started to show higher consumption levels recently which supported Chinese exports.
The nation's retail trade gained 16.2% during October from a year earlier more than the previous 15.5% and higher than analyst's estimates of 15.7%. The interior front remain playing a great role supporting economic recovery, since the government spent 4 trillion yuan on infrastructure projects and on supporting domestic spending which managed to offset the weakened shipments in the first quarter of this year.
As for inflation, a report today showed that consumer prices declined 0.5% in October from a year earlier compared with a previous decline by 0.4%, while the producer prices index fell 5.8% from a decline by 7.0%. As for the purchasing price index, it came in at -8.4% from -10.1%, and it came less than the expected -8.0%.
This decline came amid low crude oil and raw materials prices that led to lower goods prices. On the other hand, the decline on yearly basis came due to comparing the current low crude oil prices with last year's prices that was much higher than levels we currently see.
The government and the People's Bank of China eased credit conditions to boost the banking system and support companies to offset the bad debts and the decline in demand, which resulted in cheerful corporate earnings.
Moreover, a strong recovery witnessed in China may pressure the People's Bank of China to tighten the policy and interest rates may be raised from the low record of 5.31% amid fears asset price bubbles.
Industrial production in China rebounded 16.1% in October from a year earlier following an incline by 13.9% and it came higher than the forecasted 15.5%. A record lending growth in addition to the government's stimulus spending helped the nation's manufacturing sector to rebound that gave optimism to exporters in other countries in the Asian region as demand for raw materials and primary goods increased.
A $2.2 trillion of stimulus spending by governments around the world helped world demand to pick up after a sharp decline followed the collapse of Lehman Brothers, while major economies are emerging from recession and markets started to show higher consumption levels recently which supported Chinese exports.
The nation's retail trade gained 16.2% during October from a year earlier more than the previous 15.5% and higher than analyst's estimates of 15.7%. The interior front remain playing a great role supporting economic recovery, since the government spent 4 trillion yuan on infrastructure projects and on supporting domestic spending which managed to offset the weakened shipments in the first quarter of this year.
As for inflation, a report today showed that consumer prices declined 0.5% in October from a year earlier compared with a previous decline by 0.4%, while the producer prices index fell 5.8% from a decline by 7.0%. As for the purchasing price index, it came in at -8.4% from -10.1%, and it came less than the expected -8.0%.
This decline came amid low crude oil and raw materials prices that led to lower goods prices. On the other hand, the decline on yearly basis came due to comparing the current low crude oil prices with last year's prices that was much higher than levels we currently see.
The government and the People's Bank of China eased credit conditions to boost the banking system and support companies to offset the bad debts and the decline in demand, which resulted in cheerful corporate earnings.
Moreover, a strong recovery witnessed in China may pressure the People's Bank of China to tighten the policy and interest rates may be raised from the low record of 5.31% amid fears asset price bubbles.
