China’s rising food prices pushed up inflation to a one-year high in the world’s second largest economy.
The consumer price index (CPI) unexpectedly rose to 2% in August from a year ago, mainly on higher food prices and not due to a pickup in economic activity.
On the back of that, the producer price index (PPI) fell 5.9% – marking its 42nd consecutive month of declines.
Deflation fears in China are growing as manufacturers continue to cut prices.
The PPI decline was the biggest drop since the global financial crisis in 2009 due to falling commodity prices and slumping demand.
Economists said the continuing fall in producer prices poses the risk of trickling through to consumer prices.
Meanwhile, pork prices which weigh heavily on consumer prices in China, rose from 16.7% last year to 19.6% in August, while vegetable prices surged from 9.7% to nearly 16%.
Economists are expecting the government to step up with more policy measures to stimulate the economy.
Speaking at the World Economic Forum in Dalian on September 10, Chinese PM Li Keqiang was the latest policymaker to reiterate that the government will continue to support the economy to ensure stable growth.
China has marked the defeat of Japan in World War Two with a huge military parade in Beijing, showcasing its military might on an unprecedented scale.
President Xi Jinping in his opening speech paid tribute to “the Chinese people who unwaveringly fought hard and defeated aggression” from Japan.
He also said the People’s Liberation Army would be reduced by 300,000 personnel, but gave no timeframe.
The country’s growing military power is being keenly watched amid regional tensions.
China has several territorial disputes with neighbors in the South China Sea, as well as with Japan in the East China Sea.
Ahead of the parade, the US said five Chinese ships had been spotted in the Bering Sea off Alaska for the first time.
Photo Reuters
More than 30 foreign government officials and heads of state including Russian President Vladimir Putin and UN Secretary General Ban Ki-moon attended the event.
However, many Western leaders and Japan’s PM Shinzo Abe have stayed away.
Some 12,000 troops and 200 aircraft, as well as tanks and missiles, were on display in Tiananmen Square, including the anti-ship “carrier killer” missile Dongfeng-21D.
More than 80% of the machinery on display was being shown to the general public for the first time, according to state media.
President Xi Jinping, also the commander of the armed forces, was centre stage at the parade’s proceedings.
China’s People’s Liberation Army (PLA) is the world’s largest military, with 2.3 million members. China also has the second biggest defense budget after the US.
In the build-up to the event, state media have published commentaries reinforcing Chinese patriotism and views on historical events.
Entertainment shows were also suspended on television to make way for the coverage.
Beijing’s normally smoggy skies were unusually blue, after factories were closed, barbecues banned and cars stopped from travelling to reduce pollution.
Concerns about China’s growing military assertiveness and the tone of the parade meant many Western and Asian leaders stayed away from the event.
China’s stock market has continued its recent slide after fresh data provided further evidence of a slowdown in the country’s economy.
According to an official survey, China’s manufacturing activity contracted at its fastest pace in three years in August.
As a result, the mainland’s benchmark Shanghai Composite share index fell by 1.2% to 3,166.62.
In Hong Kong, the Hang Seng index dropped 2.2% to 21,185.43.
The slowing of the world’s second largest economy and the extreme volatility on the mainland stock markets have weighed on global equities over the past few weeks.
Chinese mainland stocks have been on a steep downward slide over the past few months, shedding almost 40% since June.
Any fresh indication that China’s woes are set to continue is likely to frustrate Beijing’s attempts to reassure traders and stabilize the Shanghai and Shenzhen markets.
Chinese authorities have injected money into the markets, allowed the state pension fund to start buying up shares and lowered lending rates.
So far though, none of those measures have managed to push the markets back into positive territory.
China has also cracked down on people accused of spreading online “rumors”, and who the authorities say have been “destabilizing the market”.
Shares were also lower elsewhere in Asia. Japan’s benchmark Nikkei 225 index saw the region’s biggest losses, closing the day down 3.8% at 18,165.69.
Australia’s S&P/ASX 200 ended 2.1% lower at 5,097.40.
Traders in Sydney were cautious as any slump in China is likely to have an effect on Australia, which relies on the country as its main export destination.
The decision by Australia’s central bank not to cut interest rates also contributed to the downbeat mood.
In South Korea, the benchmark Kospi index also fell, dropping 1.4% to 1,914.23.
Affected by the slowdown in China, Seoul reported on September 1 that exports fell 14.7% in August from a year earlier, worse than expected and the biggest drop in six years.
China stock market ended the week almost 8% lower after volatile trading that started on August 24 with shock losses and spread fear to global markets.
On August 28, the mainland’s benchmark Shanghai Composite closed up 4.8% at 3,232 points.
China’s second bourse, the Shenzhen Composite, closed up 5.4% to 1,846 points, but ended the week 9.4% lower.
Other Asian stock markets also continued their rebound, helped by a strong finish for Wall Street.
Photo AFP
Japan’s benchmark Nikkei 225 closed up 3% at 19,136 points, but the Hang Seng index in Hong Kong reversed earlier gains to close down 1%.
The Hang Seng ended the week 3.6% lower – its sixth consecutive weekly fall.
In London, the FTSE 100 also turned negative, after initially rising, to be down slightly at 6,186 points.
In Sydney, the ASX 200 finished 0.6% higher at 5,263 points.
Marking the end of a week of corporate results, the supermarket Woolworths reported a 12.5% drop in full-year profit – its first fall in almost two decades.
However, Woolworths’ shares closed 1.5% higher after the retailer announced a new chief executive in a bid to revive its fortunes.
South Korea’s Kospi index finished 1.6% higher at 1,937 points.
The recovery across Asia took its cue partly from China’s recovery, but also the strong sentiment from the US.
Shares on Wall Street rose overnight and oil prices jumped sharply after revised figures showed the US economy expanded far more than originally thought in the three months to June.
China stock market returns to positive territory after massive losses there earlier in the week rocked markets around the globe.
The Shanghai Composite was up by 0.6% to 2,942.94 points.
The turnaround though does little to make up double-digit percentage losses made so far this week.
Shares elsewhere in Asia also made gains in early trade on the back of a jump on Wall Street on August 26, which saw its biggest rise in 4 years.
In other Asian markets on August 27, Hong Kong’s Hang Seng index was up by 2.5% at 21,613.48 points; the region’s biggest stock market, Japan’s Nikkei 225, finished trading 1.1% up at 18,574.44, building on strong gains made the previous session; South Korea’s Kospi also notched up gains for a second day. The index closed 0.7% higher at 1,908.0 points.
In Australia, the benchmark S&P/ASX 200 wrapped up the day 1.2% higher at 5,238.70 points.
Severe losses on the Chinese market over the past week had sent shockwaves around the globe.
A move by the country’s central bank, the People’s Bank of China, to cut its key lending rate on August 25 initially failed to calm the Chinese market.
Concerns about China’s slowing economic growth have been rising for months with a constant trickle of poor economic data, the latest of which last Friday suggested that factory activity shrank in August at its fastest pace in more than 6 years.
Analysts believe the tentative share market rebound indicates fears over China’s woes may have somewhat eased.
Wall Street shares opened sharply higher on August 26, with the Dow Jones 1.3% up, after losing ground on August 25.
At the same time, European stock markets lost ground as fears persist of a China-led economic downturn.
London’s FTSE 100 closed down by 1.7% , with markets in Paris and Frankfurt finishing down by 1.4% and 1.3% respectively.
Experts expect more market volatility until the Federal Reserve meets in September to set US interest rates.
The Shanghai index fell 1.27% to 2,927.29 on August 26, after veering in and out of negative territory.
Elsewhere in Asia, the region’s largest index, Japan’s Nikkei 225 finished 3.2% higher on Wednesday at 18,376.83 points.
The Nikkei’s gains come after a painful week for the Tokyo index, which had shed more than 8% in the past two sessions.
South Korea’s Kospi index was also in positive territory, closing 2.6% higher at 1,894.29 points, while in Australia, the S&P/ASX 200 finished 0.7% up at 5,172.80.
This website has updated its privacy policy in compliance with EU GDPR 2016/679. Please read this to review the updates about which personal data we collect on our site. By continuing to use this site, you are agreeing to our updated policy. AcceptRejectRead More
Privacy & Cookies Policy
Privacy Overview
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
