CHINA TOPIX

11/02/2024 01:35:00 pm

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China's Producer Prices Hit 5-Year High in December

China's production sector registered a 5.5% increment in 2016, the highest since September 2011.

(Photo : Getty Images) China's production sector registered a 5.5% increment in 2016, the highest since September 2011.

China's producer prices for coal and raw materials hit a whole new high in December 2016, the highest record since 2011, thus signaling economic stabilization.

A statement issued by the National Statistics Bureau on Tuesday highlighted a 5.5 percent increase in the Producer Price Index (PPI) for December. The figure is closest record registered similar to that of in September 2011 and is a great increase from the 3.3 percent recorded in November. It also surpassed Reuter's projected 4.5 percent increase.

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Consumer price inflation also stood at 2.1 percent from a year ago, lower compared with Reuters' 2.3 percent forecast.

The Yuan also weakened by 6.5 percent against the US dollar, a new low registered for the first time in more than two decades.

During an interview with CNBC, Raymond Yeung, a chief economist for Greater China at the Australia and New Zealand Bank (ANZ) in Hong Kong, explained that more was to be expected from the statistics presented.

 "The PPI returning to a positive is a kind of stabilization that can help industrial profits to improve and can also alleviate some of the liquidity pressure of corporates," Yeung said.

In his remarks, Yeung explained that following the recent events in the Chinese market, it was safe to conclude that deflation was over in the second world power.

"The bottom line is that as long as the Chinese government is able to prevent deflation, China can buy time to fix some of the structural problems," Yeung said.

Statistics on the full year growth are expected to be released next week. Researchers are of mixed opinions of  what a Trump presidency could do to the Chinese economy.

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