Home > Asia/China > Lending Spikes in China, Confidence Falls, & Consumer Prices Remain Tame for Now…

Lending Spikes in China, Confidence Falls, & Consumer Prices Remain Tame for Now…

February 10th, 2010 Michael McDonough

According to the China Securities Journal, Chinese banks lent almost CNY1.4 trn in new loans during January–third-largest monthly total on record. This was less than the CNY1.6 trn some outlets has been speculating on, but far more than what I expect the government would have liked. But, considering that it was reported that CNY1.1 trn had been lent by the middle of the month, it would appear government controls began to suppress lending in the latter part of the month.

Consumer inflation unexpectedly slowed in China to 1.5% in January from 1.9% in December. The consensus forecast was for a 2.0% increment. Food inflation, which is a key component to consumer prices in China rose 3.7%, compared to 5.3% in December. I expect consumer prices will continue to accelerate in February, likely moving above 2.0%. Despite the slowdown in consumer prices, wholesale prices jumped 4.3% from 1.2% in December.

Consumer confidence in China fell to a five month low on the back of the government’s tightening and poor stock market performance.  The indicator from to 97.2 in January from 99.1 in December.  The index bottomed in November of 2008 at 88.6.  Any reading below 100 implies pessimists out number optimists.

On a personal note, I recently joined Twitter, so please feel free to add me to your list. Twitter: FiatEconomics

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