Chinese lawmakers face mounting pressure to support economic growth after an unexpectedly large drop in exports last month and the steepest decline in producer prices in almost six years.
China’s producer price index fell 5.4 percent year-on-year last month, according to Chinese National Bureau of Statistics (NBS) data released yesterday.
The decline — the biggest since October 2009 — came on the heels of trade data on Saturday that showed exports last month shrank 8.3 percent from a year earlier, compared with an estimated decline of 1.5 percent.
The data indicate weak domestic and international demand for Chinese factory products and suggest that interest rate cuts and efforts to stabilize local government finances have yet to spark a recovery.
The People’s Bank of China has lowered interest rates four times since November last year to support an economy expected to grow this year at the slowest pace since 1990.
“The goal this year is to sustain growth, so policies will continue to stimulate demand,” Commerzbank AG economist Zhou Hao (周皓) said.
Maintaining an economic expansion of about 7 percent poses a challenge because the financial sector cannot be expected to surge in the second half like it did during the recent stock market boom, Liu Ligang and Louis Lam, analysts at Australia & New Zealand Banking Group Ltd (ANZ) wrote in a note yesterday.
Chinese stocks have lost almost US$4 trillion in market value since their mid-June peak.
“Monetary policy will need to become more supportive,” the ANZ analysts said.
They forecast another interest rate reduction this quarter, as well as a cut of 50 basis points to the portion of deposits that lenders must hold in reserve.
The slump in exports “compounds downward pressure on China’s economy and threatens to bring exchange rate depreciation onto the table as a tool to restore competitiveness,” Bloomberg Intelligence chief Asia economist Tom Orlik wrote in a research note on Saturday.
The Chinese Central Bank has held a vice-like grip on the yuan, allowing it little movement in the onshore market. The currency’s closing levels in Shanghai last week matched the tightest range recorded since a fixed exchange rate ended a decade ago.
In its quarterly monetary policy report released on Friday, the central bank said it would let the market play a bigger role in setting exchange rates while keeping them “at a reasonable equilibrium level.”
Factory-gate prices of excavated oil and natural gas dropped 34.6 percent last month, while those of ferrous metal fell 20.1 percent, according to the NBS. Non-food consumer prices rose 1.1 percent year-on-year, down from 1.2 percent in June.
Overall, the consumer price index increased 1.6 percent from the year-earlier period, as a surge in pork prices offset sluggish growth in the cost of non-food items. The price of meat leaped 16.7 percent last month from a year earlier, according to the NBS.
However, the pork-led pickup is unlikely to cause the central bank to change tactics.
“Monetary policies will not change with the price of individual commodities, but will observe the general price trends,” the central bank said in a policy report.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique