February’s Dismal Numbers

The newly released economic statistics don’t make for cheerful reading in Beijing. Consumer price inflation in February was 4.9% year-on-year, unchanged from January’s rate and with food prices up 11% in February compared to 10.3% in January. The New Year holiday will have pushed food prices up somewhat but the increase along with February’s producer price index being up 7.2% suggests inflationary pressure won’t be abating soon.

Neither is the sharp increase in residential real estate investment in January and February reassuring, up 35% from the same period a year earlier, and above the 33% growth for 2010.  Overall fixed-asset investment growth was up 24.9% year-on-year for the two months, compared to 23.8% for 2010. Central government investment was up 6.3% but local governments’ remains strong, up 26.9%. Beijing won’t be happy about that as it suggests the government is struggling to rein in the economy and make headway in its intention to rebalance the economy away from investment.

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