China Tells

Two sets of data for Sept 09 have been released recently: A) GDP growth 8.9% for Q3; B) CPI falls only 0.8%. The combination of these two sets lead a lot of analysts to speculate and conclude below: 1) China government will slow down the stimulus; 2) China has a risk of inflation in ’10. I don’t see it that way. I think the analysts are either forced to say something in public to keep their job, or saying something that probably they themselves don’t believe in. China government’s target is to grow 8% for 2009. To meet that target, Q4 need to grow at least 9%. Secondly, the main source of inflation for China will have to be the price of commodity, which China consumes and imports more than half of the world total, particulary in energy and metal. To confirm a sign of inflation, one has to see a reaction in the sector of commodity, and probably the sector of freight (BDI), which normally is a prior indicator for all the rest. All in all, it is a typical logic from books in business schools that money printing of US will result in inflation sooner or later. While there is no problem with such a logic, the real world is much more complicated and it is premature to speculate the Chinese government to exit expansion cyce now. In fact, there is no reason to suggest any meaningful recvery nor serious trouble of inflation therefore it is more likely that the China government will continue to maintain the expansionary policy for the near future.

一些银行的分析员和所谓的经济学家看了中国统计局最近发布的国民生产总值和消费者生产指数，就贸然断定政府将收紧控制信贷减少刺激政策的规模。这样的结论缺乏事实根据并且有些信口开河不负责任。事实上在09年年底之前，中国政府收紧财政和货币政策的可能性几乎为零。至于10年，还是留到10年再说吧。