China’s key inflation barometers – CPI and PPI continue to show signs of slowdown in September, enabling the central government to exert more control over economic policy, stimulate domestic demand and loose price control on resources materials.

The latest figures provides a favorable environment for Chinese Premier Wen ‘s resolution to deploy his economic policies for the fourth quarter.

Chinese-Premier-Wen-Jiabao

Chinese-Premier-Wen-Jiabao

Photo courtesy of http://www.chinadaily.com.cn

Premier Wen policy boost

Premier Wen Jiabao, while addressing at the State Council last week, outlined his top 10 assignments which include: 

  • Develop Small and medium enterprise sector – encourage financial institutions to lend to SME and expand direct financing channels to them
  • Maintain stable trade growth
  • Strengthen domestic investment
  • Step up energy-saving measures
  • Increase fiscal revenue

Mr Wen also said China would increase tax rebates on textiles, labor-intensive products and high value-added machinery and electronics destined for overseas.

Dwindling CPI and PPI figures in September

According to the National Bureau of Statistics (NBS), China’s Consumer Price Index (CPI)softened to 4.6% in September, which was 4.9% in August, 6.3% in July and 7.1% in June. Food prices, which account for more than a third of the CPI calculation, rose 17.3 percent during the January to September period.

The Producer Price Index (PPI) rose 8.3 percent in the first nine months. In September alone, the PPI surged to 9.1% over the same month last year, yet is lower than 10.1% in August.

China Exporters, the mainstay of China’s economic growth, have also been hit, with growth in the nine months to September down 4.8 % from the same period last year. Suppliers are diverting their energy to open up business lines in China domestic market.

Alibaba forms a task force

In the middle of financial crisis, SMEs are already feeling the chill. Aliuser reckoned that Alibaba announced a task force last week to come for rescue. Led by David Wei, chief executive of Alibaba.com,  the task force is dedicated to deploy the group’s resources, initiating relief plan very soon.

 

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