The Truth About Last Week’s Shock Chinese Trade Deficit

Patrick Chovanec
An American Perspective
Business Insider

Two important pieces of economic data came out in China over the past two days.

I’ll deal with the more straightforward story first.  On Friday, China’s Consumer Price Index (CPI), a standard measure of inflation, came in at a year-on-year increase of 4.9% for February, the same rate as in January.  The number suggests that while inflation isn’t getting dramatically worse, it hasn’t gotten any better either, despite two months of tighter anti-inflationary policies.  Even the most optimistic analysts suspect a substantial amount of further tightening will be needed to bring the rate down to the government’s 2011 target of 4%.

Now onto a somewhat more complicated subject.  China released its monthly trade figures on Thursday, showing a $7.3 billion trade deficit in February.  Since China usually runs trade surpluses – and large ones at that – the news attracted a lot of attention and prompted plenty of speculation about what it all might mean…

The article continues at Business Insider

Also at Business Insider, Chinese Inflation Comes In Hot, As PBOC Announces New Push To Globalize The Yuan

Image: jimmiehomeschoolmom via flickr

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