Drivin’ that train
China’s inflation and trade gap are growing, as China’s exports continue to expand to a dizzying $25 billion per month surplus, and money supply growth continues at 15-20%. WSJ:
China yesterday reported another sizable monthly trade surplus, with exports exceeding imports by $24.97 billion in August — a surplus exceeded only by June’s $26.91 billion. Although export growth slowed somewhat, the strong trade data — along with a 6.5% surge in the consumer-price index in August — underscored how China remains focused on managing fast growth rather than weathering a slowdown. Indeed, the Shanghai Composite Index fell 4.5% yesterday, as investors expect that China’s central bank will soon raise interest rates for the fifth time this year…
international companies complain that it is already more difficult than it should be to sell their products into China or to invest in local operations, and they say those problems aren’t going away…despite these policy worries, business finds little to complain about in the economic environment in China, which is growing at a rate of more than 11% this year. China has been regularly attracting more than $60 billion a year in foreign direct investment — money that goes to build or acquire operations — making it one of the most popular destinations for business. This year, investment has already totaled $36.93 billion as of the end of July, marking a 13% increase from last year.
“Given this incredible economic-growth pattern, it’s extraordinary how little you see in terms of bottlenecks,” Mr. Wuttke, the EU chamber official, said. “There are some manpower shortages,” he said, but energy and electricity supplies are generally available, and China’s ports are managing to handle the enormous volume of goods without major slowdowns.
The train continues barreling down the track. We should note that China’s inflation is almost entirely due to a current pork shortage expected to be alleviated around April of next year: “even though meat prices rose 49% over a year earlier, nonfood inflation continues at a modest 0.9%.”