Welcome to the 223rd edition of Trade War.
First an announcement: Trade War will be taking a brief hiatus with no issue published on August 18th while I take a short summer break. It will resume on August 25th. See you all then!
Consumer prices edge up, a hint of good news, but poor weather a key factor in the rise. China’s economy has become “difficult to heat,” warns prominent economist. And exports slow unexpectedly, suggesting an important economic driver may be weakening as global demand softens.
Chinese Communist Party sees consumption as “an individualistic distraction” while viewing manufacturing as part of country’s “core economic strength.” China’s impressive Olympics tally. And worried that they will no longer be able to use the world’s best drone technology, US law enforcement and search-and-rescue agencies pushing back against a proposed ban on Shenzhen’s DJI.
Notable/In depth ~
Vice presidential candidate Tim Walz’s substantial China experience
China’s electric vehicle market has become larger than the rest of the world’s combined
And civilian settlements are being used to solidify China’s frontiers along the disputed India and Bhutan borders, an interactive report reveals
Prices edge up in China
Prices in China edged up last month, seemingly a hint of good news after months of weak demand, data from the National Bureau of Statistics showed.
Consumer prices rose 0.5 percent in July compared to the same period a year earlier, faster than the 0.3 percent predicted in separate surveys by Bloomberg and Reuters.
But while the rise in CPI was a positive sign, with NBS chief statistician Dong Lijuan crediting “a continued recovery in consumption demand” for the data, she also noted that weather, including elevated temperatures and heavy rain, had an impact.
Other economists also cited bad weather, along with previously low pork prices, as factors behind the rise.
“Unfavorable weather conditions and the low base for pork prices from last year, instead of rising domestic demand, were the major drivers,” says Mizuho Securities Asia senior China economist Serena Zhou.
Services and non-food prices were weak, with big cuts happening in the vehicle, home appliances, and smart phones sectors, all facing vicious competition.
Meanwhile, producer or factory-gate prices fell by 0.8 percent over the previous July, continuing a deflationary trend going back almost two years.
Check out the full announcement from the statistics bureau’s Dong Lijuan here (Chinese).
But economy becoming “difficult to heat up”
Despite efforts by Beijing to boost household spending, including last week’s announcement of a 20-step package of polices, many economists are unconvinced that consumption will soon reignite.
Why’s that?
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