My subscription
...
Filters
My Subscription All Publications

No, China isn’t exporting inflation

Some believe that China is adding to global inflationary pressure. The opposite is closer to the truth: the large increase in China’s trade surplus over the past year signals that supply from China has risen far more than demand. Global consumer goods prices are rising in spite of China, not because of it. Admittedly, China’s rapid, investment-intensive recovery has been an important factor in the rise in global commodity prices over the past year – this is the key reason why China’s producer price inflation hit a 12-year high last month. But China’s contribution to the surge in global demand for consumer durables has been relatively small – unlike in many major economies, retail spending on goods in China is not particularly strong. And while dollar prices of goods from China have risen over the past year, these price hikes have generally failed to keep up with the pace of renminbi appreciation. In renminbi terms, export prices have been falling unusually fast.
Julian Evans-Pritchard Senior China Economist
Continue reading

Related publications

China Data Response

China Activity & Spending (May)

Headline growth on all the key indicators dropped back last month. But after adjusting for base effects the picture was more mixed, with investment slowing, industrial output growth holding steady and retail sales accelerating. While there is still scope for a further recovery in consumption, we think investment and exports are set to cool over the coming months.

16 June 2021

More from China

China Data Response

China Bank Lending & Broad Credit (Jul.)

Credit growth dropped back last month, with property market jitters weighing on bank lending. It may continue to disappoint in the near-term given that sentiment among homebuyers is likely to stay weak and government borrowing is on course to slow.

12 August 2022

China Data Response

China Consumer & Producer Prices (Jul.)

Consumer price inflation rose to a 24-month high in July and is now nearing the government’s target of 3%. But that is still very low by global standards, and we think headline inflation is close to a peak and will drop back over the coming quarters. Meanwhile, producer price inflation fell to its lowest in 17 months.

10 August 2022

China Data Response

China Trade (Jul.)

Exports held up well last month, thanks to a backlog of orders still being cleared. But it won’t be long before shipments drop back on cooling foreign demand. Meanwhile, imports continued to trend down, pointing to further domestic weakness.

8 August 2022

More from Julian Evans-Pritchard

Long Run Update

Employment already declining at pace

Revisions to the historic data following the recent census show that China’s population barely grew last year and that employment is already contracting faster than previously understood, having peaked in 2014 rather than 2017. The silver-lining, however, is that the new data suggest that productivity growth has slowed by less and that there is greater scope to counter demographic headwinds by boosting participation rates over the coming decades.

1 July 2021

China Data Response

China Caixin Manufacturing PMI (Jun.)

The Caixin manufacturing index published today dropped back last month and adds to signs from the official PMI released yesterday that momentum in industry is waning. The surveys point to a levelling off in demand and easing of price pressures, even as supply shortages continue to constrain output.

1 July 2021

China Data Response

China Official PMIs (Jun.)

The latest surveys suggest that growth softened this month. A slower improvement in services activity was mostly to blame. But supply shortages also continued to hold back output in the manufacturing sector. On a more positive note, the surveys point to an abrupt easing in price pressures recently.

30 June 2021
↑ Back to top