February Trade and Inflation Figures: Good or Bad News for China?
Two important pieces of economic data came out in China over the past two days.
Ill deal with the more straightforward story first. On Friday, Chinas Consumer Price Index (CPI), a standard measure of inflation, came in at a year-on-year increase of 4.9% for February, the same rate as in January. The number suggests that while inflation isnt getting dramatically worse, it hasnt gotten any better either, despite two months of tighter anti-inflationary policies. Even the most optimistic analysts suspect a substantial amount of further tightening will be needed to bring the rate down to the governments 2011 target of 4%.
Now onto a somewhat more complicated subject. China released its monthly trade figures on Thursday, showing a $7.3 billion trade deficit in February. Since China usually runs trade surpluses and large ones at that the news attracted a lot of attention and prompted plenty of speculation about
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