China Tells

A mix of positive reading in China leads me to think that China is among the leaders to shape the world economy recovery. The import grew a hefty margin of more than 25%, combined with a strong growth of new car sales within the country. Such a growth provides important markets to other countries who benefit from China’s robust recovery (See Article from WSJ). At the same time, the industrial production and FAI continues strong growth, particularly in the production sector. The growth in Electricity consumption confirms the expansion in production and demand. Meanwhile, the money supply continues the mild growth in M2 with slowed down new loan growth in banks. Such a mixture of readings provides such a picture: export/import strong recovery, monetary policy expansion over, production still encouraged to expand, and consumer price starting to pick up. I keep my doubts on the inflation prospect: on one hand, the jump in import combined with an increased price of oil price, plus an increase in money supply, if the velocity of money circulation  comes hand in hand, poses serious threat of inflation coming out of pandora’s box. On the other hand, the over capacity utilized by industries, especially in steel and aluminum sector, leads to a more likely scenario of deflation. For the moment, which direction takes the lead is still unclear to me.

中国11月份宏观经济数据显示了强劲的复苏状况，特别是出口和进口，以及工业产出和固定资产投资，加上M2货币供应的持续上升，让人感觉国内经济正在稳步升温。该升温情况在消费者物价指数和房价方面得到了一定体现。但是同时，过度的工业产出增长也让人对产能的过分开发产生担忧。因此未来6个月通胀还是通缩占据经济主要论调还有待观察。