According to a report in today’s Bloomberg, Chen Deming, Vice Chairman of the National Development and Reform Commission, said in a speech to the congress today that consumer prices rose 4.1 % in the first nine months of 2007.That apparently calculates to a rate of between 5.8% and 6.2%, but I don’t have the numbers to do the calculation myself.
Not surprisingly, this was presented as good news (“Inflation has clearly moderated” he said), but even compared to August’s 6.5% number, it is not particularly good news, and certainly is not compared to the 5.6% reached in July. I am not sure how important the price freezes have been, but I would guess that they must have had some effect in artificially depressing the nominal number, and if inflation has been caused by more than a couple of temporary factors (monetary expansion maybe?), the price freezes shouldn’t have any positive effect.Anyway my trusty calculator tells me that this means inflation for the past three months has been 6.0%, well above the PBoC target.
By the way the article also mentions that property prices jumped 20.8% in Shenzhen and 12.1% in Beijing in August from a year earlier
Michael Pettis is a professor at Peking University's Guanghua School of Management, where he specializes in Chinese financial markets. He has also taught, from 2002 to 2004, at Tsinghua University’s School of Economics and Management and, from 1992 to 2001, at Columbia University’s Graduate School of Business. He is a member of the board of directors of ABC-CA Fund Management Co., a Sino-French joint venture based in Shanghai.
Pettis has worked on Wall Street in trading, capital markets, and corporate finance since 1987, when he joined the Sovereign Debt trading team at Manufacturers Hanover (now JP Morgan). Most recently, from 1996 to 2001, Pettis worked at Bear Stearns, where he was Managing Director-Principal heading the Latin American Capital Markets and the Liability Management groups. He has also worked as a partner in a merchant banking boutique that specialized in securitizing Latin American assets and at Credit Suisse First Boston, where he headed the emerging markets trading team. Besides trading and capital markets, Pettis has been involved in sovereign advisory work, including for the Mexican government on the privatization of its banking system, the Republic of Macedonia on the restructuring of its international bank debt, and the South Korean Ministry of Finance on the restructuring of the country’s commercial bank debt.
Pettis is a member of the Institute of Latin American Studies Advisory Board at Columbia University as well as the Dean’s Advisory Board at the School of Public and International Affairs. He is the author of several books, including The Volatility Machine: Emerging Economies and the Threat of Financial Collapse (Oxford University Press, 2001). He received an MBA in Finance in 1984 and an MIA in Development Economics in 1981, both from Columbia University.
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January, 2008
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