EURUSD 1.1851 |
USDJPY 111.52 |
GBPUSD 1.3772 |
AUDUSD 0.7485 |
USDCAD 1.2406 |
GBPJPY 153.59 |
EURJPY 132.15 |
AUDJPY 83.48 |
CADJPY 89.86 |
Silver 26.23 |
How I Assess CPI تداول بيان التضخم
;
فيديو حول كيفية تداول الذهب والدولار الأمريكي وناسداك عند صدور تقرير التضخم
How I gauge 4 CPI components before trading XAUUSD, Nasdaq and DXY
usdx @ 80.625
nov 4 usdx @ 76.41
usdx @ 80.435
Beijing faces tough choices as rising prices turn political
By Geoff Dyer in Beijing
Wang Qishan, the Chinese vice-premier, likes to tell foreign visitors who urge a particular course of action on Beijing: You know, we also have politics here.
One of the defining narratives of the global financial crisis is that Chinas Communist party technocrats outplayed partisan Washington and an incoherent Europe.
There is a good deal of truth in this. Beijings 2008 stimulus plan was earlier and more decisive than any other big economy and proved very successful at maintaining growth.
Yet as Beijing tries to come off its stimulus high, its leaders are in danger of getting hemmed in by domestic politics. Their thorny problem is rising inflation, which hit 5.1 per cent last month.
Inflation is one of the red-line political issues in China because ordinary people suffer a double whammy. Not only do living costs rise but the nearly $2,000bn that households hold in deposit accounts start to earn negative returns. Indeed, the current round of inflation is transferring wealth from households to the big borrowers in the corporate and state sectors.
Yet politics is restraining the obvious policy responses. Despite the jump in inflation, Beijing has increased interest rates only once in the past year and by only 0.25 per cent.
One reason for the caution is that higher rates could hurt the state-owned companies that borrowed so heavily over the past two years for stimulus-related construction.
The political sensitivities are especially acute in the property sector. In many places, developers are often an extension of the local government. So if Beijing increases borrowing costs, a thunder of criticism can be expected through the party-state system.
Exchange-rate moves would offer another obvious tool to damp inflation. Yet intense backroom lobbying by Chinas exporters has limited appreciation against the US dollar to little more than 3 per cent this year. Indeed, despite high growth and a still-large current-account surplus, the renminbi has actually been getting weaker against a basket of trading partners currencies recently.
The crucial question is: how stubborn is the present bout of inflation? It is certainly possible that inflation will peak soon and gradually subside next year. The main driver has been food prices, particularly vegetables, which were affected by bad summer weather. If it is only a short-term supply problem, inflation will ease with the next harvest.
Yet even if this current rise in prices is short lived, there are plenty of reasons to be fearful that higher inflation lurks ahead. Factory wages appear to be rising faster than before. Some economists think the huge overcapacity in industry that held back prices over the past decade is much lower today.
In addition, there is the potential impact from the ocean of new credit in the economy. Loans doubled last year and money supply has risen by about 50 per cent over the past two years. Informal lending also seems to be growing.
Fitch, the rating agency, has calculated that new credit outside the formal banking system has been Rmb3,000bn ($450bn) this year more than a quarter of the total. Lending has not moderated; it has merely found new channels, said Fitch.
Given Chinas impressive economic record, it may seem unfair that investors talk of the Wen Jiabao put the idea that the premier will always boost lending whenever growth slows below 8 per cent, just as Alan Greenspan provided a backstop for the US stock market.
With two years left in office for Mr Wen, however, the natural tendency might be to put off tough political decisions for the next generation. Plenty of Chinese officials are lobbying Mr Wen for another year of generous lending in 2011 to keep growth humming. While Beijing has stepped up the rhetoric on structural reforms to boost consumption, few signs of substance have been noted.
If inflation subsides, China can continue to muddle along, allowing just enough lending to sustain strong growth. But a persistent rise in prices will leave Mr Wen unable to avoid some hard choices: between slower growth or higher inflation and a potentially destabilising bubble; between negative real rates or higher nominal rates; and between exporters and households. At that point, the politics of Chinas response to the crisis will start to get interesting.
By Editorial
As long as Chinas leaders continue to resist a nominal appreciation of the renminbi, a higher domestic general inflation rate is an ineluctable and largely desirable result.
The trend in Chinese prices points increasingly upward: yearly inflation was 5.1 per cent in November, up from 4.4 per cent in October. The uptick is partly due to food prices, which grew by 11.7 per cent in the year to November, up from 10.1 per cent in October. Non-food prices, in contrast, were a mere 1.9 per cent higher than a year before.
Food price inflation is a nightmare haunting any government and rulers as insecure as those in Beijing are the most easily rattled of all. The strong impact of food prices on general inflation serves as a useful reminder of what a poor country China still remains. Beijing is vigilant to the social unrest food costs can spark. No wonder: its authoritarianism is ill-equipped to let people air grievances peacefully.
Global food commodities markets are one cause, but domestic Chinese conditions matter too. These are reassuring. Many factors driving up vegetable and pork prices are reversible, and producers are already reacting to higher prices. Beijing has corralled banks into an extraordinary lending spree with clear inflationary effects but this is within Beijings means to undo.
Provided food price growth slows down, Chinas government should be relaxed about general inflation. Chances of a stronger renminbi are hampered by Beijings refusal to do anything that can be interpreted as doing anothers bidding. So relative price levels must do the work of real exchange rate appreciation. A consistent gap between US and Chinese inflation rates, say of 5 per cent, could be the smoothest way to unwind the perverse financial imbalance between the two nations.
The implied rate for China, some seven per cent, would be consistent with the countrys internal development. Chinas great leap forward in productivity annual total factor productivity growth touched 3 per cent before the crisis reflects its role as the workshop of the world. But wealth created by manufacturing prowess finds its way into non-tradeable sectors and pushes prices up there. Economists know it as the Balassa-Samuelson effect: persistent inflation is the flip side of a secular manufacturing boom.
Still, Beijing must address inflations most disruptive effects. Special attention must be paid to food costs, but also to capital markets: low bank savings returns already encourage a shady parallel credit system. State industrial capitalism will sooner or later need more regulated financial capitalism as well.
all i can say is we have different point of view.
zhou xiaochuan: "we can export hot money by invest in foreign county"
well, i don't think so.
yoni, could you read some FT article about china before you talk?