CX Daily: The Rise of China’s Consumer Inflation is Accelerating
China’s consumer inflation nears 8-year high on pricey pork
Consumer inflation in China soared to nearly an eight-year high in November, official data showed Tuesday, as pork prices continued to climb amid an ongoing supply shortage caused by the African swine fever crisis.
The consumer price index (CPI) rose 4.5% YOY in November, faster than October’s 3.8% growth, according to data released by the National Bureau of Statistics (NBS). Inflation hadn't been this high since January 2012, and the CPI rise topped the median estimate of 4.4% in our survey of economists.
A jump in food prices contributed 3.7 percentage points to the CPI growth last month, NBS senior statistician Shen Yun said in a statement. The surge was mainly driven by pork prices, which on average soared 110.2% year-on-year and made up 2.6 percentage points of the CPI growth, NBS data shows.
FINANCE & ECONOMICS
The expansion of China’s nascent derivatives market is expected to attract foreign investors. Photo: VCG
In depth /
China speeds up expansion of derivatives market
China’s securities regulator recently approved the launch of five commodities options and three financial options, marking unprecedented measures to broaden the derivatives market. The moves are expected to attract more global investors to the China market, especially hedge funds.
The China Securities Regulatory Commission (CSRC) has made clear it aims to ease the rules in the derivatives market and increase offerings, making it more accessible and attractive to foreign investors and helping the market for A-shares to mature, a person close to the regulator said.
Check out our overview of recent measures.
Why easing monetary policy is not enough
“You can lead a horse to water, but you can’t make it drink” is how economist Zhong Zhengsheng describes the predicament facing China’s central bank as it tries to push the country’s banks to cut interest rates and increase lending to bolster flagging economic growth.
Much of the banking industry has been reluctant and slow to respond to its years of encouragement for commercial lenders to hand out more credit and reduce the cost of borrowing for companies. Zhong, director of macroeconomic analysis at CEBM Group Ltd., an affiliate of Caixin Global, said sluggish borrowing demand, banks’ declining profit growth and their unwillingness to cut loan rates are all barriers to the effectiveness of monetary policy.
Check out our deep dive.
Private Chinese companies get no relief in bond market
Following a series of rate cuts by China’s central bank, the corporate bond market has been cheered by declining yields, but only SOEs seem to have benefited from lower borrowing costs while private companies are still struggling.
As of Dec. 5, the yield spread between AAA-rated corporate bonds issued by central state-owned enterprises (SOEs) over government bonds of the same quality narrowed by 8 basis points from early November before the rate cuts, and the spread for local SOEs shrank by 7 basis points. Meanwhile, the spread for similar private corporate bonds widened by 2 basis points, data from Everbright Securities showed. A basis point is a hundredth of a percentage point.
China’s fifth-largest bank makes mainland debut
State-owned lender Postal Savings Bank of China Co. Ltd. debuted Tuesday on the Shanghai Stock Exchange in the largest IPO on the A-share market since 2010.
The bank’s shares opened at 5.6 yuan (80 U.S. cents) and closed at 5.61 yuan, up 2% from the offering price of 5.5 yuan. There was active trading of the lender’s shares, which had a turnover rate of 54.45% and a total trading volume of 9.05 billion yuan on the day.
Quick hits /
Singapore, China sign pact to deepen legal cooperation
BUSINESS & TECH
Chinese authorities shut down image providers for ‘illegal’ news services
China’s cyber authorities shut down two of the country’s photo services, IC Photo and Visual China Group (VCG)—the world’s third-largest image provider—in the latest high-profile censure under laws regulating news outlets.
VCG and IC Photo provided online news services without a permit and "illegally" worked with foreign companies to conduct similar activities, the Cyberspace Administration of China (CAC), the country’s internet regulator, said Tuesday on its public WeChat account. By partnering with foreign companies without first conducting “security evaluations,” the companies “severely disrupted the social order of online information dissemination,” the CAC said.
Business sentiment /
British companies in China much less optimistic than last year
British businesses’ optimism has declined significantly since last year, according to a British Chamber of Commerce in China report released Tuesday, citing economic uncertainty and regulatory challenges in the Chinese market.
The top regulatory challenges this year were related to cybersecurity, corporate finances and equal treatment with state-owned companies, the survey found. Only 35% of British businesses believed they were treated equally with their domestic counterparts. The survey’s 249 respondents reported an overall positive response to the Chinese government’s efforts to cut red tape and improve intellectual property protections.
China car market heads for unprecedented second annual drop
Car sales in China declined again in November, extending a historic slump and all but ensuring a second straight annual drop for the world’s biggest auto market.
Sales of sedans, sport utility vehicles, minivans and multipurpose vehicles fell 4.2% from a year earlier to 1.97 million units, the China Passenger Car Association said Monday. The decline was the 17th in the past 18 months, with the only increase coming last June as dealers offered large discounts to clear inventory.
JD.com’s Richard Liu steps down from key positions but retains control
JD.com Inc. Chairman Richard Liu held on to control of at least two key subsidiaries of the e-commerce giant, even as he spent the last few weeks giving up leadership positions on paper.
Liu’s retention of control suggests that key-man risks persist for JD.com, despite his announcement last year that he would loosen his grip on the company. Liu’s arrest on suspicion of rape in 2018 raised concerns that he held too much power under JD’s concentrated structure. Liu has quietly stepped down from top jobs at multiple JD.com subsidiaries over the past few weeks, including the company’s logistics, cloud computing, and health-care units, changes in business registry records show.
Quick hits /
Huawei to equip more of its devices with its Harmony OS in 2020
Tencent teams up with tech firms to build satellite network
Ambitious Nanjing chip project faces capital strain
Audi hints it’s nearing pact with China’s biggest carmaker
HNA’s SR Technics sale draws Airbus, Hainan province
Former big-name auto brand reaches end of the road
Xiaomi takes on Apple in Japan with 108-megapixel budget smartphone
Editorial: Gree electric’s equity transfer illustrates the value of entrepreneurs
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