Count Even Less on China Now

Jem_B · 发表于 2011-10-13 15:37:01

中国已无力担当世界经济引擎

China is headed for a much bumpier landing than the global economy would like.

For months now, the hope has been that lower Chinese inflation would provide the scope for lower interest rates and a way for Beijing to escape a nasty pop in the country’s property bubble. But, as the bubble starts to burst and the economy starts to shake, high food prices and the need to preserve social stability could well prevent the People’s Bank of China from easing policy and securing a soft landing.

A measure of just how large a threat the property sector now poses to the economy as well as to the country’s banking system came with the news that China’s sovereign wealth fund has been instructed to buy the shares of major Chinese lenders.

This came after the Nation Bureau of Statistics reported that prices fell or were unchanged in 46 out of 70 major Chinese cities during August. In July, the number was 31.

This coming Friday, new consumer price figures are expected to show that, as the economy slows, inflation is also subsiding. The consumer price index for September is forecast to fall to 6.1%, extending August’s decline to 6.2% from 6.5% in July.

This should clear the way for the PBOC to start reversing its recent rate increases, especially given that at least some of the fall in inflation is coming from lower prices in pork.

However, all is not quite so simple.

Simon Derrick, a senior strategist with Bank of New York-Mellon in London, said the food sub-index is up 10% on a year ago and, within this, meat and poultry prices are up nearly 30% on a year ago.

So, look for rate cuts to help property prices?

Forget it. Especially when food and the risk of social instability are at stake. This is China, remember. The economic equations that may seem to work obviously elsewhere, do not necessarily do the trick here. So Beijing is stuck between a rock and a hard place, unable to respond to the bursting of the property bubble with lower interest rates because of the threat that would pose to already high food prices.

And, there certainly doesn’t appear to be any early resolution. As Mr. Derrick reminds us, the PBOC advisor Li Daokui warned some time ago that inflation is “most likely chronic.”

Of course, China has other policy options at its disposal, including reduction in bank reserve requirements, which were pushed steadily higher as the authorities attempted to slow the economy down. Nonetheless, this implies that with Beijing unlikely to secure a ‘soft’ landing for the economy, China will remain as sensitive about its yuan exchange rate as it was before and is hardly likely to accelerate the current steady pace of appreciation and provide any immediate relief for the badly battered global economy.

该贴已经同步到 Jem_B的微博