In this file:
· US trade war drives China’s producer prices into deflation, as pork prices send consumer inflation higher
· U.S.-China trade war continues to escalate
· China sees higher food prices
· China’s food prices jump 9.1% in July as the country battles African swine fever
· China’s bank lending weakened in July, suggesting Beijing’s stimulus efforts not working
US trade war drives China’s producer prices into deflation, as pork prices send consumer inflation higher
Producer price index (PPI) fell back into negative territory at minus 0.3 per cent in July compared to a year earlier, down from the flat reading in June
Consumer price index (CPI) rose to 2.8 per cent in July, the highest reading since February 2018, largely due to rising pork prices
John Carter, South China Morning Post
9 Aug, 2019
The US-China trade war is forcing China’s manufacturers to sell their products at a discount rate, driving prices into deflationary territory in July, data released on Friday showed.
The producer price index (PPI), reflecting the prices that factories charge wholesalers for their products, fell into negative territory at minus 0.3 per cent compared to a year earlier, down from the flat reading in June.
The release showed the pressure being placed on manufacturers in China due to tariffs the United States have placed on Chinese imports, but also the wider malaise in the global economy, which analysts are predicting is veering dangerously close to recession.
PPI last dropped into negative territory in August 2016, having remained in deflationary territory for 54 consecutive months from March 2012.
One major concern is the negative economic impact if price declines become entrenched, and wholesalers delay their purchases in the expectation of lower prices in the future.
China’s consumer inflation, meanwhile, remained high in July, due in large part due to the cost of pork, with the African swine fever crisis ravaging the pig population in the world’s biggest consumer of pork.
The consumer price index (CPI) rose to 2.8 per cent, the highest reading since February 2018, and a slight increase on the 2.7 per cent figure reported in May and June. Pork prices rose by 27 per cent year-on-year.
The continued rise in prices is eroding the purchasing power of Chinese consumers at a time when they are already anxious about their incomes and job prospects. Policymakers in Beijing are also counting on stronger consumer spending to offset the impact of the weakening economy and the trade war with the United States.
Dong Yaxiu, a director at the National Bureau of Statistics (NBS), said that along with soaring pork prices, the price of fresh fruit rose by 39.1 per cent in July from a year earlier, while the prices of eggs, chicken, beef, lamb and fresh vegetables all rose by between 5.2 per cent and 11.4 per cent.
But it is the continued rise in pork prices that causes most concern, with China’s pork prices projected to reach a record level by the fourth quarter of 2019 due to the impact of African swine fever, according to a report Rabobank released at the end of July.
“China’s pork and hog prices are likely to break the previous record high in 2016 by the fourth quarter,” said Pan Chenjun, the report’s author and a senior analyst for animal protein at Rabobank.
Pork is thought to be the single-largest element in the basket of consumer goods used to calculate CPI. China consumes around half the global total annually, meaning that a spike in pork prices affects the average consumer disproportionately...
U.S.-China trade war continues to escalate
Legislative Watch: U.S. labels China currency manipulator; EU-U.S. beef agreement; Food Date Labeling Act; Crop Insurance Caucus.
P. Scott Shearer, National Hog Farmer
Aug 09, 2019
As predicted China retaliated this week against President Trump’s latest move to increase tariffs on $300 billion of Chinese goods effective Sept. 1.
China suspended the purchase of all U.S. agricultural products and threatens to place tariffs on agricultural goods purchased after Aug. 3. China has been purchasing fewer U.S. agricultural products. U.S. agricultural exports to China were $24 billion in 2014. Exports were $9.1 billion last year and estimated to decline this year. Soybeans are one of the most impacted commodities.
According to USDA’s Economic Research Service, China imported 8.7 million metric tons of soybeans from the U.S. between October 2018 and June 2019. This compares to the 16.3 million metrics tons imported during the same period last year.
The Department of the Treasury ratcheted up the trade war this week by listing China as a currency manipulator after China let its currency, the yean, depreciate. Treasury will now enter negotiations through the International Monetary Fund to adjust the rate of exchange which is required by the Omnibus Trade and Competitiveness Act of 1988. The last time the U.S. listed a country a currency manipulator was in 1994.
President Trump said today that he was not ready to make a deal with China and he didn’t know if the next round of negotiations scheduled for September would take place.
EU-U.S. beef agreement
President Trump announced that the European Union and the United States Trade Representative signed an agreement that will increase the amount of high-quality U.S. beef from non-hormone treated cattle going to the EU.
The agreement establishes a specific duty-free tariff rate quota for the U.S. The initial TRQ of 18,500 metric tons will increase over seven years to 35,000 metric tons. The new quota will increase annual sales of U.S. beef exported to the EU from $150 million to $420 million in seven years. Currently, the U.S. exports 13,000 metric tons with an estimated value of $150 million.
The European Parliament must vote on the agreement before it goes into effect. The vote is expected this fall.
Confusing food date labels ...
Crop Insurance Caucus established ...
China sees higher food prices
By Nicole Heslip, Brownfield
August 9, 2019
Food prices in China have now reached their highest levels since January of 2012.
Their National Bureau of Statics is reporting July food prices were up more than nine percent from last year as higher pork and fruit prices push the index higher.
Fruit prices are up nearly 40 percent while dry weather there decreases production. U.S. apples were the largest supplier in the Northern Hemisphere for China in June despite a 50 percent tariff. Fresh U.S. fruit exports to China are about half of what they were last year because of tariffs.
Pork prices were 30 percent higher as China continues to battle African swine fever.
The consumer price index...
China’s food prices jump 9.1% in July as the country battles African swine fever
China’s July food prices jumped 9.1% from a year ago, data from the National Bureau of Statistics showed on Friday.
Overall, China’s consumer inflation rose 2.8% from a year ago in July.
Producer prices fell 0.3% from a year ago.
Huileng Tan, CNBC
Aug 9 2019
China’s July food prices jumped 9.1% from a year ago, data from the National Bureau of Statistics showed on Friday, as the country battles soaring pork prices amid the spread of African swine fever.
In particular, pork prices rose 27% from a year ago in July while fresh fruit prices rose 39.1%, the data showed.
The July figures follow an 8.3% year-on-year jump in June. Non-food items in July were 1.3% higher, government data showed.
Chinese fruit supply has been hurt by severe weather that hurt crop production this year, sending prices of apples up sharply. China is the world’s largest producer and a major consumer of the staple fruit.
The official inflation data came after China confirmed Tuesday it will be suspending imports of agricultural products from the U.S. in response to President Donald Trump’s new tariffs.
U.S. exports of fruits to China have already been falling in the last year with fresh fruit exports falling to $123 million from July 2018 to June 2019 — down by about half from $239 million the previous year, data from the U.S. Department of Agriculture (USDA) showed.
The USDA said in a June report that the U.S. remained China’s top Northern Hemisphere supplier for apples even with a 50% tariff on the import of the fruit.
Overall, China’s Consumer Price Index (CPI) rose 2.8% from a year ago in July, slightly higher than the 2.7% analysts in a Reuters poll had expected.
“Surging pork prices continued to push up consumer price inflation,” said Julian Evans-Pritchard, senior China economist at Capital Economics. But “weakening demand dragged producer price inflation into negative territory last month,” he wrote in a Friday note.
Producer Price Index fell 0.3% in July from a year ago, compared to the 0.1% decline analysts in the Reuters poll had expected.
That was the first time China’s PPI — a gauge of corporate profitability — fell in three years, adding to concerns of deflationary risks in the world’s second largest economy.
This comes as China and the U.S. continue to be locked in a prolonged tariff battle that has dragged on for more than a year...
more, including links
China’s bank lending weakened in July, suggesting Beijing’s stimulus efforts not working
· Chinese banks extended 1.06 trillion yuan (US$150.17 billion) in net new loans last month, down from 1.66 trillion yuan (US$235.17 billion) in June
· There was an eye-catching drop in corporate lending in July, plunging by two-thirds to 297.4 billion yuan (US$42.1 billion) from 910.5 billion yuan the month before
Orange Wang, South China Morning Post
12 Aug, 2019
Chinese monetary data for July was weak across the board, suggesting that Beijing’s efforts to galvanise new lending are not having the intended effect.
Chinese banks extended 1.06 trillion yuan (US$150.17 billion) in net new loans last month, down from 1.66 trillion yuan (US$235.17 billion) in June, according to the data released by the People’s Bank of China on Monday.
July’s lending was well below the 1.25 trillion added bank credit predicted by a Bloomberg survey of economists, and was the lowest level since April, when banks issued 1.02 trillion yuan in new loans.
The slump raises questions over the need for additional credit easing – when a central bank sets lower interest rates, for example – from the People’s Bank of China (PBOC) to offset the effect of a weakening economy and the impact of the protracted trade war
with the United States.
As a rule, lending generally declines in July on a monthly basis, since it is the first month in the third quarter. Bank lending ordinarily spikes towards the end of a quarter. However, the decline this year was larger than expected, well below the corresponding 1.45 trillion yuan in new loans in July 2018.
There was an eye-catching drop in corporate lending in July. New corporate loans plunged by two-thirds to 297.4 billion yuan from 910.5 billion yuan the month before.
New household loans, mostly mortgages, fell to 511.2 billion yuan (US$72.42 billion) in July from 671.7 billion yuan in June.
There was also a sharp slowing in national aggregate financing – a catchall measure of credit from nonbank, local government and mainstream banking channels – which grew by 1.01 trillion yuan in July, less than half the 2.26 trillion yuan gain in June and much lower than expectations of 1.63 trillion yuan.
Liang Zhonghua, chief macro analyst at the Research Institute of Zhongtai Securities, said that this was a result of low credit demand, due to the slowing real estate cycle and stricter regulation of infrastructure financing – China’s two major engines of credit growth in the past decade.
“Without stimulus from property and infrastructure, both the economic growth rate and credit demand will trend downward,” he wrote in a note.
Other credit indicators were also weak...