People’s Bank of China (PBC) Governor Zhou Xiaochuan (周小川) said China is under “pressure” from capital inflows as a state newspaper said price controls could be imposed to cool the fastest inflation in two years.
Zhou reiterated government goals of “moderate” credit growth and stronger liquidity management at a forum in Beijing yesterday. The China Securities Journal said price limits are possible for food, citing unidentified sources.
The Shanghai Composite Index tumbled 4 percent yesterday, after a 5 percent plunge on Friday, amid speculation that surging inflation may trigger more monetary tightening.
Capital flowing into China because of easing in developed economies and speculation that the yuan will appreciate adds to money already in the financial system from record domestic lending.
“Everybody knows that inflation is a huge problem,” independent economist Andy Xie (謝國忠) said in a Bloomberg Television interview in Hong Kong. “The bottom line is that money supply has increased too much.”
Xie sees another interest-rate increase “soon.”
The US Federal Reserve’s decision to buy US$600 billion of US Treasuries came as China raised its benchmark lending and deposit rates for the first time since 2007.
Last month’s inflation rate of 4.4 percent was higher than any of the estimates in a Bloomberg News survey of economists.
Some emerging economies have grown quickly and face “pressure” from capital inflows as growth in developed nations has slowed, Zhou said.
Rising prices in China need attention and officials should “strengthen liquidity management and maintain moderate growth in credit and money supply,” he said.
China may impose price limits on food and toughen punishment of those found speculating on -agriculture futures including corn and cotton, the China Securities Journal reported, citing an unidentified person.
The government may also crack down on hoarding, offer food subsidies and hold local mayors responsible for ensuring vegetable supplies and controlling prices, the report said.
In May, the government said hoarders would be fined by up to five times the value of the commodities held, the paper said.
Corn prices in China jumped to a record yesterday as tightening supplies increased their investment appeal. Rice also reached an all-time high.
China has already sold sugar, cotton, corn, aluminum and zinc from stockpiles to ease supply shortages.
Vegetable prices in the first 10 days of this month jumped 62.4 percent from a year earlier, the Financial News reported yesterday, citing a survey by the Chinese Ministry of Commerce.
Prices have also jumped 11.3 percent from the start of this year, according to the newspaper published by China’s central bank.
Fan Gang (樊綱), a former adviser to the People’s Bank of China, said that inflation is being imported into China in the form of higher price for foods such as soybean oil and animal feed.
Policymakers will take action, he said.
Currency appreciation “may be used as a policy to deal with inflation and that would not only be good for the control of inflation, but also would be beneficial for the overall balance of the domestic economy and external economy,” Fan said at a forum in Singapore yesterday.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure