11/10/2015, 00.00
CHINA
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China, inflation increases but only slightly. Government: It 's time to buy

Data for October 2015 shows a decline in rising prices, and the National Statistics Bureau invites the markets to act "before prices go up again”. Expectations of a Party decision between a new economic stimulus, or a radical transformation of the national economy.

Beijing (AsiaNews) - In October 2015, inflation in China slowed down more than expected, paving the way for a possible stimulus for the national economy by the central authorities. Consumer prices have risen over the same period by 1.3%, compared to + 1.6% in September. Economists had expected an increase of 1.5%.

Last month, food prices - one of the key drivers of domestic consumption - increased by 1.9%. Excluding this and the energy sector, inflation fell from 1.6% to 1.5%. Producer prices fell in China in October, as in September, by 5.9%. It was the 44th drop in a row on an annual basis. Experts had predicted a drop of 5.8%.

This seems to point to the end of the "tiger" days of the Chinese economy, the second largest in the world, which now aims to push for renewed foreign investment and stimulate domestic consumption. The National Statistics Bureau, which released the data today, pointed out that the increase in "moderate" inflation should push the market to buy "before prices go up again."

Meanwhile, markets and major international investors are waiting to see the Communist Party’s next move. Some expect a new injection of capital, the so-called stimulus, that led to the double-digit growth of the past decade while creating bubbles – in real estate but also in the stock market - that could destroy the GDP.

Others believe the decisions taken by the Communist Leaders  over the last 12 "correct" and speak of the need for "radical reform" of China’s economic system. In fact the leaders aim to transform an economy based on industrial production - heavy, polluting and tied hand in glove to the international market – to one based on the third sector and new technologies. However, the authorities have not indicated how they intend to accomplish this revolution.Data for October 2015 shows a decline in rising prices, and the National Statistics Bureau invites the markets to act "before prices go up again”. Expectations of a Party decision between a new economic stimulus, or a radical transformation of the national economy.

 

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