Growth Dragons Weekly: China’s Long Deflation is Exaggerated as Inflation Returned
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Here’s what happened in Growth Dragons this week:
China’s Long Deflation is Exaggerated as Inflation Returned
China Stimulus Continues: More Cities Relax Property Rules + Cut Reserve Ratios + Insurers Can Invest + Cash Injection
3. EU Investigating Subsidized China EV Imports
Singapore GIC and Temasek Are Sticking With China Investments While Foreign Funds Exit
1. China’s Long Deflation is Exaggerated as Inflation Returned
China demonstrated favorable economic indicators in August, surpassing expectations:
Industrial output rose 4.5% from a year earlier, higher than estimates
Retail sales jumped 4.6%, also above estimates and above July’s 2.5% gain year-on-year
Property investment slid 8.8% in the January-to-August period
The urban unemployment rate was 5.2% in August, slightly lower than the previous month
In August, China also witnessed a notable expansion in loans. Chinese banks disbursed 1.36 trillion yuan in new yuan loans during the month, marking a substantial rise from the 345.9 billion yuan reported in July.
Household loans, encompassing mortgages, increased to 392.2 billion yuan in August, in stark contrast to the 200.7 billion yuan reduction seen in July.
Additionally, corporate loans experienced a surge, reaching 948.8 billion yuan, compared to the 237.8 billion yuan recorded in July.
China's consumer prices turned positive in August, with the consumer price index (CPI) rising by 0.1% compared to the same month the previous year, rebounding from a 0.3% decline in July.
While not completely out of the woods, these developments indicate that concerns of prolonged deflation and comparisons to Japan's lost decade are unfounded.
2. China Stimulus Continues: More Cities Relax Property Rules + Cut Reserve Ratios + Insurers Can Invest + Cash Injection
There were a handful of stimulus moves that China implemented this week.