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    China factory gate prices rise at fastest rate since 1995

    Gate prices at factories in China rose at the fastest pace in more than a quarter of a century as record coal prices increased inflationary pressures on businesses and manufacturers.

    The producer price index rose 10.7% year-on-year in September, with official data showing Thursday the highest rate of increase since 1995. PPI rose 9.5% in August.

    Soaring global commodity prices have pushed up factory gate prices in China Suddenly high This year Coal shortage It exacerbates the energy crisis and leads to a call from the government for higher production.

    The rise in producer prices in the country, which was boosted in September by the basic effects of 2020, has been carefully watched during this period. Higher inflation in the U.S. It raised concerns among policy makers.

    But the numbers haven’t penetrated yet Consumer prices In China, it rose only 0.7% in September, slower than in August.

    Apart from the potential spillover to Chinese consumers, producer prices are also raising concerns. More than higher cost For the manufacturing industry in a country that has helped facilitate the rapid recovery of the coronavirus from a pandemic, but is currently under pressure from a power shortage.

    Zhiwei Zhang, Chief Economist at Pinpoint Asset Management, said: “The ambitious goal of carbon neutrality puts continuous pressure on commodity prices, which is passed on to downstream companies.”

    Trade data released Wednesday revealed that China’s coal imports surged 76% year-on-year in September. Power distribution In factories and companies. The data also show resilient trade despite energy problems, with exports up 28% in dollars year-on-year in the same month.

    The government has been working to raise commodity prices after announcing its goal of reaching carbon neutrality by 2060 last year. A state conference in May, chaired by Chinese Prime Minister Li Keqiang, announced that important coal companies would be “encouraged to increase production.”Inner Mongolia Weekly Authority Increased output ordered..

    China’s factory gate inflation “will not last this long,” added that there are few signs that power shortages are pushing up finished product prices, said Ciana Yue, assistant economist at Capital Economics.

    “Sooner or later, as real estate construction slows, coal and metal prices are likely to fall,” she said.

    In addition to energy shortages, China’s economy is under pressure from its vast real estate sector-wide slowdown and financial difficulties at some of the largest real estate developers, including: Evergrande, I missed interest payments on dollar-denominated bonds this week.

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