China: data show slow economic improvement, but local governments are trying to solve the problem of hidden debt
Some economic data arrives from China and shows that the path towards normalization is slow and not without some uncertainty.
Chinese consumer prices remained unexpectedly stagnant in September 2023, missing market forecasts of a 0.2% increase and following a 0.1% increase in the previous month. The decline in food prices accelerated (-3.2% versus -1.7% in August), in a context of ample supply ahead of the Golden Week holidays, while pork prices fell to a more marked pace.
Meanwhile, non-food inflation accelerated (0.7% vs. 0.5%), as costs rose further for clothing (1.1% vs. 1.0%), housing (0 .2% versus 0.1%), healthcare (1.3% versus 1.2%) and education (2.5% versus 2.5%); while transport prices fell at a slower pace (-1.3% vs -2.1%).
Core consumer prices, excluding food and energy, increased by 0.8% year-on-year, at the same pace as the previous two months, and remained at the fastest pace since January, and this is a good sign, because it indicates a positive wage dynamic . On a monthly basis, consumer prices increased 0.2% in September, compared to the consensus and 0.3% in August.
Here is the relevant graph
Exports continue to decline, although less than expected. The cause is the global economic slowdown and the main protagonist of this decline is, not surprisingly, Europe with -11.6%., but there is also a decline towards the USA -9.6%, and Japan -6.4%. Obviously, given that Europe is the area of the world in strong decline, it is the one that shows the lowest imports. Here is the relevant graph.
Meanwhile, a solution is being sought to the enormous problem of local government debt . As Caixin reports, nine provincial-level governments across China plan to raise a total of 410 billion yuan ($56 billion) through special bonds to swap their hidden liabilities, bringing them onto the books, while Beijing carries out its plans to address localities' implicit trillions of dollars. debt.
The amount of these special refinancing bonds sold by each government varies considerably, from Qinghai province issuing 9.6 billion yuan in new banknotes to the Inner Mongolia Autonomous Region printing 106.7 billion yuan worth, according to the information published Wednesday on ChinaBond, an official platform. for the registration of bonds.
This step would allow unaccounted debts to emerge and suppliers of goods and services to be paid billions, giving a boost to the economy of these regions.
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The article China: data shows slow economic improvement, but local governments try to solve the problem of hidden debt comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/cina-i-dati-mostrano-un-miglioramento-economico-lento-ma-le-amministrazioni-locali-cercano-di-risolvere-il-probblema-del-debito-nascosto/ on Fri, 13 Oct 2023 07:56:28 +0000.