Saturday, 19 July 2008

Chinese economy cools

There are signs that the Chinese economy is cooling. AFP/CNA reports:

China's economy expanded by 10.4 per cent in the first half and 10.1 per cent in the second quarter, the National Bureau of Statistics said, down from growth of 11.9 per cent recorded for all of 2007...

China's consumer price index - the main gauge of inflation - rose 7.9 per cent in the first half of 2008, with food prices soaring 20.4 per cent, according to the bureau...

For June alone, inflation was 7.1 per cent, the bureau said.

While the CPI looks encouraging, Michael Pettis says that the acceleration in PPI inflation tells a different story. He thinks that the debate about whether or not to tighten monetary conditions further will "rage on".

But Morgan Stanley thinks that the latest data at least paves the way for a policy shift towards preventing economic slowdown.

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