China's economy is slowing rather fast. That's the only conclusion to be drawn from the above chart. It shows a major collapse in producer price inflation (PPI), from July's 7.5% peak to just 2.7% in November.
The decline from September's 6.5% level has been particularly dramatic, with the index down nearly 2/3rds in just 2 months.
Usually such declines are linked to major falls in commodity prices, as in 2008. But whilst some commodities have slipped in price, others such as crude oil are still at Q3 levels. So one has to conclude that producers have suffered a major loss in pricing power due to a downturn in demand.
Thus the PPI numbers are another sign that the ending of the credit bubble is having a major impact. And once bubbles burst, particularly those of China's size, it usually takes a very long while for confidence to be restored.
Comments (1)
There's smetohing I don't quite understand. Maybe I'm misreading it. Why does it sound like Obama is *asking* China to appreciate the yuan? Doesn't that mean Obama is *asking* China to dump the dollar peg?
Posted by Claudia | February 23, 2012 9:11 PM
Posted on February 23, 2012 21:11