Inflationary pressures are rapidly increasing in China's fast-growing economy, with new data from China's central bank, the People's Bank of China, showing that companies paid fast-rising prices last month to buy a wide range of commodities and industrial products.
Inflation in China has become a growing concern to bankers, corporate executives and monetary officials around the world.
The Chinese economy, as a producer, and the US economy, as a consumer, have emerged as the two main engines of the global economy, but China's ability to sustain its breakneck pace of economic growth is increasingly in doubt, said Sung Sohn, an executive vice president of Wells Fargo.
PHOTO: EPA
"There's a greater probability the Chinese engine might stall, and that represents the greatest threat to the global economy," Sohn said during a visit to Hong Kong on Thursday.
The corporate goods price index of the People's Bank of China jumped 8.3 percent last month compared with March last year.
The index measures prices that companies pay for goods from other companies, and covers transactions at many levels of the economy, from the iron ore that mines sell to steel mills to the washing machines that appliance manufacturers sell to distributors and retailers.
The rise last month represents a swift acceleration in an important measure of inflation. The year-over-year change was less than 1 percent as recently as June, and the index was actually falling in 2002. The big mystery now, economists said, is when and whether the latest rapid increases will show up in the prices that consumers pay at their nearest vegetable market or hardware store.
According to the National Bureau of Statistics, the consumer price index was only up 2.1 percent in February, compared with a year earlier.
Its producer price index of industrial products, which measures what producers of finished goods charge to distributors and retailers, was up 3.5 percent.
The bureau is periodically accused by Western and Chinese experts of adjusting statistics for political reasons, something the agency's officials strongly deny. The widening discrepancy between the bureau's figures and the less well-known but more alarming data from the central bank is nonetheless starting to attract attention among economists.
Asked about why some data shows inflation in China at 3 percent or so, an official at the People's Bank said the bank was absolutely convinced that its figures were accurate.
"Don't believe other people's figures," he added.
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