China scores gains in controlling inflation, economic growth - analysts
Friday, October 22, 2004 3:55:37 AM
afxpress.com
BEIJING (AFX) - China has scored gains in reining in inflation and cooling economic growth, analysts said
Third quarter GDP growth dropped to 9.1 pct from 9.6 pct in the first half, while the CPI eased slightly to 5.2 pct in September from 5.3 pct in August
"This is the result we wanted," JP Morgan economist Ben Simpfendorfer told XFN-Asia
While CPI growth has slowed slightly, prices are unlikely to fall significantly in the coming months, he added
"It doesn't change the basic story that we're in for a higher price environment. Expect to see some decent-sized monthly CPI figures in the coming months, in the range of four to five pct. Don't expect them to drop much below that." Huang Yi Ping, an economist at Citigroup, said the slowdown in GDP growth will ease pressure on the government to take more drastic measures to cool the economy
"Overall I think (GDP) still represents very strong growth despite the tightening policies introduced," Huang said
"There is probably less need for further tightening economic policy (as the data point to) slowing investment." China has already taken a number of administrative measures to slow the rise in prices and control what it sees as overheating sectors of the economy. But some economists have expressed concern that China's prices could still move sharply higher, under pressure from the mounting cost of imported crude oil as well as rising domestic grain prices
Tim Condon, China Economist at ING in Singapore, described the figures as "very market friendly", adding that they would reduce pressure on the government to revalue the currency
"On balance, they will take some of the pressure off the currency debate in the sense that the decline in inflation argues against the need for revaluation for inflation control purposes," Condon said
Some economists have argued that China needs to revalue its currency in order to reduce pressure on prices from mounting money supply
Under China's existing currency regime, foreign exchange earned by exporters is sold to the central bank which then has to create 8.3 yuan for each US dollar it purchases, thereby expanding the money supply. (1 usd = 8.3 yuan)
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I am amazed at this BS
everyone thinks it is significant that China drops from 9.6 to 9.1, but HUGE pullbacks over the past several months on leading indicators, jobs, etc etc ect here is just a "soft patch"
Amazing horesh*t
Mish |
