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Stagflation, Made In China Edition

Tyler Durden's picture


So much for the world's largest economy no longer overheating. CPI came ahead of expectations yet most other key economic indicators confirmed a slow down in the economy, even as borrowing appears to be picking up once again. Could China be exhibiting the very first symptoms of our very own stagflationary squeeze?

  • CPI at 5.3%, Consensus at 5.2%, previous 5.40%
  • PPI at 6.8%, Consensus at 7.0%, previous 7.3%
  • Industrial Production up 13.4%, Consensus of 14.7%, previous at 14.8%
  • Retail Sales 17.1%, Consensus of 18.0%, previous 17.40%

And more from Bloomberg, which was lucky enough to have the fake data embargoed in advance:

China’s consumer prices rose 5.3 percent in April from a year earlier, exceeding the government’s full-year target for a fourth straight month.

The gain was more than the 5.2 percent median forecast in a Bloomberg News survey of 30 economists and compared with a 5.4 percent increase in March. Producer prices increased 6.8 percent, the statistics bureau said today in Beijing.

Inflation is “the most pressing problem” facing China, Vice Premier Wang Qishan said at talks in Washington this week where the U.S. pressed for faster gains in the yuan. Economists’ median forecast is for one more interest-rate increase this year, adding to four since mid-October, as a dip in commodity costs and more favorable bases for comparison slow price gains in the second half.

“Another slight uptick in inflation is possible by mid- year, but it seems that for inflation, the worst is nearly over for China,” Alaistair Chan, a Sydney-based economist at Moody’s Analytics said before today’s announcement.

Fixed-asset investment grew 25.4 percent in the first four months of 2011 from a year earlier, today’s report showed. Retail sales rose 17.1 percent in April and industrial production gained 13.4 percent.

The government aims for full-year inflation of 4 percent as Premier Wen Jiabao eyes the risk that rising prices for basic goods and housing will fan social discontent. Commodities had their biggest weekly decline since December 2008 last week, aiding his campaign by trimming the nation’s import bill.

Officials have raised banks’ reserve requirements, reined in credit growth from the record levels of 2009 and 2010, restricted home purchases, and this month fined consumer goods company Unilever 2 million yuan ($300,000) for telling the media that it planned to raise prices.

The median forecast in a Bloomberg News survey of analysts is for the benchmark one-year lending rate to rise by a quarter percentage point to 6.56 percent by the end of the year. The People’s Bank of China let the yuan gain 0.9 percent in April, the fastest pace of appreciation this year.

“With economic growth stabilizing, policy makers signaling they are willing to tolerate faster currency appreciation, and global food prices stalling, inflation appears on course to decline over the second half of the year,” Wang Qinwei, a London-based economist with Capital Economics, said before today’s data were released.

Deutsche Bank AG estimates the yuan may appreciate at an annualized pace of 7 percent to 10 percent against the dollar over the next two months to reduce import costs before gains slow in the second half of the year as inflation drops “sharply.”


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Tue, 05/10/2011 - 22:13 | 1261398 Cdad
Cdad's picture

Did anyone else catch that BlowHorn World [CNBC W] commentary after the release?  Good lord, it was...incomprehensible.  

First, the high CPI was a number that was splitting hairs, the PPI was soooooo much lower than...."expectations"...that it was a leading indicator that inflation is over...and the miss on the industrial production, "Could be good, could be bad."

WTF?  It is way past time to start drinkin'.

Tue, 05/10/2011 - 22:17 | 1261414 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

It is beer o'clock ain't it?  Time to throw some fake money around the bar and tip the tender like I care.

Tue, 05/10/2011 - 23:11 | 1261629 CPL
CPL's picture

It is.  Time to crack a two four and watch it burn.


btw the markets will be awesome tommorrow.

Tue, 05/10/2011 - 22:58 | 1261594 bigelkhorn
bigelkhorn's picture

Its bleeding red here at the moment. China ready to burst? Hmmm.

That guy from FFT is oz is good, I been following him for a while and he called the market crash in 2008. 

I belong to his membership site, its awesome and has live videos and everything to follow along. 

Makes it easy to take money from the market even if you are a newbie!. 

His new monthly trading club is opening tomorrow, and over at :-

Tue, 05/10/2011 - 23:11 | 1261640 CrashisOptimistic
CrashisOptimistic's picture

more spam

Tue, 05/10/2011 - 23:57 | 1261770 Fish Gone Bad
Fish Gone Bad's picture

I gotta agree.  People who make obscene amounts of money generally keep their mouths shut, at least until they want to become philanthropists, they are not out hustling people. Speaking of hustling, what the fuck is up with that video anyway?  Even the bears talking about silver is made better.

Wed, 05/11/2011 - 02:41 | 1261970 Michael
Michael's picture

I just figured out what CNBC stands for; "Central Neo-Bank Cartel" channel.

The reporters on that channel are Central Neo-Bank Cartel employees.

This revelation makes it a lot easier to see who the reporters on CNBC actually are without the special glasses.

They Live - Obey, Consume, This is your God

Thank me.

Wed, 05/11/2011 - 07:03 | 1262156 A.W.E.S.O.M.-O 4000
A.W.E.S.O.M.-O 4000's picture

I love watching CNBC.


If by CNBC you mean Porno

Wed, 05/11/2011 - 05:23 | 1262080 Weisbrot
Weisbrot's picture

I wonder what the real numbers are. Im also curious when the effect of compound price increases are really going to take off and show inflations ugly head.

Tue, 05/10/2011 - 22:15 | 1261400 Reese Bobby
Reese Bobby's picture

Chinese economic reports: "Making up numbers since 1998"

Tue, 05/10/2011 - 23:56 | 1261773 RockyRacoon
RockyRacoon's picture

This is just what they are "reporting".   Imagine what the numbers really are.

Wed, 05/11/2011 - 05:26 | 1262082 Weisbrot
Weisbrot's picture

if other bogus numbers are any indication I believe the range is between 8% and 35% higher

Tue, 05/10/2011 - 23:58 | 1261774 Fish Gone Bad
Fish Gone Bad's picture


Tue, 05/10/2011 - 22:12 | 1261401 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Shit, China, buy more ipads.  WTF!

Tue, 05/10/2011 - 22:18 | 1261421 legal eagle
legal eagle's picture

And how long before higher Chinese prices show up at Walmart? Long bicycles.

Wed, 05/11/2011 - 04:22 | 1262033 slewie the pi-rat
slewie the pi-rat's picture

+3 schwinns

Tue, 05/10/2011 - 22:22 | 1261435 Caviar Emptor
Caviar Emptor's picture

China: rising wages, rising real asset values

US: falling wages, falling real asset values

That's the difference. They have a classic inflationary spiral from an overheated economy that may be transitioning slowly to stagflation. We're more advanced and sophisticated: we have deflationary changes in individual real incomes and net worth from falling real estate values and offshoring along with spiraling cost of living inputs. We win!

Tue, 05/10/2011 - 22:30 | 1261466 suldog
suldog's picture


Tue, 05/10/2011 - 22:44 | 1261531 Reese Bobby
Reese Bobby's picture


Tue, 05/10/2011 - 22:24 | 1261443 Dr. No
Dr. No's picture

Watch the dollar strength. This is exactly what timmah prayed for. Sell china equities and buy something denominated in another currency. Let see, not euro cuz of Greece, but what else? Humm

Wed, 05/11/2011 - 07:02 | 1262157 JimBowie1958
JimBowie1958's picture

Swiss Francs?

Tue, 05/10/2011 - 22:24 | 1261445 legal eagle
legal eagle's picture

Did you catch that crap on Sqwak on the Street this morning about US and Chinese workers wages getting close to even? I hire trained Experienced IT guys in Shanghai for $1350 Reminbi a month, how many dollars is that again?

Tue, 05/10/2011 - 22:26 | 1261449 Tyler Durden
Tyler Durden's picture

Yes. They "borrowed" it from Zero Hedge:

With China Forecast To Reach Wage Parity With The US In Five Years, Is A New Manufacturing Golden Age Coming To The US?

Of course, they only reported one half of the story.

Tue, 05/10/2011 - 22:34 | 1261468 legal eagle
legal eagle's picture

Tyler, privileged you responded. You do a great service on this website! I will read the link, but although wages are rising I don't see parity anytime soon.

Tue, 05/10/2011 - 22:39 | 1261487 Tyler Durden
Tyler Durden's picture

Read the full post

Tue, 05/10/2011 - 22:40 | 1261506 legal eagle
legal eagle's picture

Yep, read the whole post. States the case better than me. I am not worthy.

Tue, 05/10/2011 - 22:45 | 1261536 Reese Bobby
Reese Bobby's picture

Kiss Ass

Tue, 05/10/2011 - 23:11 | 1261639 legal eagle
legal eagle's picture

Just respectful, and not obstinate. I would not needlessly offend. You?

Tue, 05/10/2011 - 23:27 | 1261678 Reese Bobby
Reese Bobby's picture

Satirically witty...

Wed, 05/11/2011 - 00:02 | 1261783 Fish Gone Bad
Fish Gone Bad's picture

I don't think there is a Fight Club rule against sucking up, but I am pretty sure it is frowned upon.  If anyone wants to pay some respect, contribute $.

Wed, 05/11/2011 - 07:13 | 1262167 JimBowie1958
JimBowie1958's picture

Frowned on by who? And I do plan to donate, just cant at the moment - I am merely one of the working plebes out here in Flyovia.

Wed, 05/11/2011 - 07:11 | 1262165 JimBowie1958
JimBowie1958's picture

Why is stating the obvious sucking up?


Tue, 05/10/2011 - 22:40 | 1261491 km4
km4's picture

Inflation is “the most pressing problem” facing China, Vice Premier Wang Qishan said

But we don't have any inflation in Merica according to Ben Bernank who prints dollars like a drunken sailor

Tue, 05/10/2011 - 23:42 | 1261729 Prof Gulliver
Prof Gulliver's picture

Wrong analogy. Drunken sailors spend money. Ben is simply supplying the drunken sailors with an infinite amount of Bennie Bux.

Tue, 05/10/2011 - 23:50 | 1261759 Re-Discovery
Re-Discovery's picture

Of course he's spending, how do you think he got that balance sheet.

Ben is spending worse than drunken sailors.  He's sitting at the bar at 4 am ordering more shots hoping a couple of Red Bulls will get him to work in the morning.  Trust me, I've tried it.  Doesn't work.

And the hangover is a BIIITTTTCCCHH!

Wed, 05/11/2011 - 00:04 | 1261787 Fish Gone Bad
Fish Gone Bad's picture

That's why they invented methylphenidate.

Wed, 05/11/2011 - 01:39 | 1261916 SokPOTUS
SokPOTUS's picture

Drunken sailors only spend money until they pass out or run out of money.  We should be so lucky.

Wed, 05/11/2011 - 05:35 | 1262083 Weisbrot
Weisbrot's picture

the Ben Bernanke is doing a public service by devaluing (by printing the money) the "public" debt. and by "public" I mean the debt thrown upon us by the korrupt, to prop up their projects that benefit the few and burden the many.


insert "quote here"

Tue, 05/10/2011 - 22:50 | 1261557 buzzsaw99
buzzsaw99's picture

Time for the jasmine-baggers to get uppity again.

Tue, 05/10/2011 - 22:55 | 1261569 chump666
chump666's picture

China the biggest number fugger on the planet.  They are going to blow out in 2011.  The BS their numbers and oil goes bid, what idiots.

China's 2011 bust should send oil down, i don't think theywill go into stagflation.  just bust. USD should be bid will stabilize oil price for a little while

Tue, 05/10/2011 - 23:38 | 1261721 Whore_of_Babylon
Whore_of_Babylon's picture

China no need to worry.  China have lots of US$.  US have lots of dogs no longer can afford.  China want to improve better nutrition.  WIN CHINA. WIN US.

Wed, 05/11/2011 - 00:45 | 1261836 chump666
chump666's picture

hahaha that is funny

Wed, 05/11/2011 - 00:50 | 1261843 Dr. Engali
Dr. Engali's picture

I thought they put cat in chinese food..... Wait ,they only put cat in American Chinese food.

Wed, 05/11/2011 - 06:15 | 1262114 StychoKiller
StychoKiller's picture

Chinese epithet for being worthless:  "Wolf's heart, dog's lungs!"

Tue, 05/10/2011 - 23:54 | 1261769 What_Me_Worry
What_Me_Worry's picture

“Another slight uptick in inflation is possible by mid- year, but it seems that for inflation, the worst is nearly over for China,” Alaistair Chan, a Sydney-based economist at Moody’s Analytics said before today’s announcement.

Wow.  The sad part is he actually believed what he was saying.

Officials have raised banks’ reserve requirements, reined in credit growth from the record levels of 2009 and 2010, restricted home purchases, and this month fined consumer goods company Unilever 2 million yuan ($300,000) for telling the media that it planned to raise prices.

I am at a loss for words on this one.  I can't even come up with something sarcastic to say.  The only option now is to lie, or say nothing at all.  Zero Hedge could bailout the whole world if they just travel to China and let them levy fines against them.  They must be into the quadrillions of Yuan in truthiness.

Wed, 05/11/2011 - 04:44 | 1262049 slewie the pi-rat
slewie the pi-rat's picture

but, alf_e!  don't you know that if there is inflation the banksters and the central planners can always just bring it right under control, with nary an unintended consequece and nothing but white swans, forever, right up there with the freaking unicorns?

HPC Surface Analysis/Radar Loop

this weather map + bong = wwfamine

List of countries by population in 2000 - Wikipedia, the free encyclopedia

GeoHive - Population Statistics

other may prefer the CIA factbook angles.

food is ^^^!!! 

the global slowdown + inflation = china stagflation. 

china is at least honest with the People of the Republic:  we arge to buy gold and silver hand over fist b/c if this fiat shit doesn't work out, you're on your own, and doomed without them. 

damned commie mogambos!!!


Wed, 05/11/2011 - 00:31 | 1261822 Coldfire
Coldfire's picture

Statistical bukkake. But I repeat myself.

Wed, 05/11/2011 - 00:51 | 1261845 Jovil
Jovil's picture

Where are we individually in the Pyramid of Capitalism.

Wed, 05/11/2011 - 00:50 | 1261847 Jovil
Jovil's picture

Where are we individually in the Pyramid of Capitalism.

Wed, 05/11/2011 - 01:48 | 1261856 baby_BLYTHE
baby_BLYTHE's picture

Before we put a "limit" on debt/deficits. We need to put a lid on the Bernank (preferably a noose; for committing treason handing out money to foreigners while decent Americans were losing their homes)

Wed, 05/11/2011 - 04:55 | 1262056 slewie the pi-rat
slewie the pi-rat's picture

slewie just ordered 1/2 lid for the ship. 

now, where did i put the ship? 

skool is out!

we used to twist to this:  YouTube - Gary US Bonds - School Is Out

there are no decent americans, baby_B, only idiots like us.

Wed, 05/11/2011 - 01:07 | 1261874 Oh regional Indian
Oh regional Indian's picture

Follow a NUMBer. Become DUMBer. Crash like LUMBer. 

Get a pipe, not a PLUMBer.

Seriously though. I mean. Seriously. 

Hu buy's this crap?

That's hu!


Wed, 05/11/2011 - 04:59 | 1262061 slewie the pi-rat
slewie the pi-rat's picture


Wed, 05/11/2011 - 01:27 | 1261904 SP666_IsComing
SP666_IsComing's picture

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All news everywhere now is completely worthless and irrelevant except for ONE!


Comet (falling angel) Elenin is coming Sept 27, 2011.  Comet Elenin will be the mightiest of all the angels (comets).  It will try to overpower God (the sun), fail, be banished, and literally fall to earth.  This comet is the origin of all the old myths about the mightiest angel who fell from grace, banished by god (the sun), and fell to earth … better known to everyone as Lucifer.


This comet’s vapor trail is saturated with dust and it will sweep and engulf the earth in October (the falling angel!).  The massive vapor and dust tail will create enormous rainclouds for DAYS all over the world!!  Water levels will rise EVERYWHERE!


A biblical flood is coming in October!  This is not a joke. This is not a test.


SP-666 will be taken out before October! 


Bankster criminals, murderers and thieves (and all their ilk) have kept this “little” event secret for centuries within their stupid childish secret society cults. For nothing but pure greed and hatred for the rest of humanity, sheeple and markets have been lied to and manipulated for millennium so those greedy little devils … “chosen people” can “inherit the earth” after this event.  They are stealing and raping everyone now to accumulate every last ounce of gold (money) before October.


Financial market schizophrenic meters are off the charts due to the planning for this event!


Wake up world. Protect yourselves. Take appropriate positions, profit from those evil worshippers, survive, and take back some of that stolen bankster booty!

Wed, 05/11/2011 - 01:58 | 1261933 TraderTimm
TraderTimm's picture

Comet Elenin will be at its closest on October 16th, 2011. It will pass approximately 0.233 AU (21,700,000 miles) before whipping out of the solar system again. Looks like it might be a good object to track if you like cometary phenomena, as it will be visible to the naked eye.

The same people who believe this comet is the herald of death also thought the world was going to end in May of 2003. As we are all still here, you may want to adjust probabilities accordingly.



Wed, 05/11/2011 - 02:07 | 1261946 msamour
msamour's picture

Thanks for the heads up, I guess...

Wed, 05/11/2011 - 06:04 | 1262106 tip e. canoe
tip e. canoe's picture

isn't Elenin where the Annunaki live?  

if so, you may wanna find a new hiding place for that gold, sport.

Wed, 05/11/2011 - 01:38 | 1261912 carbonmutant
carbonmutant's picture

Is China Stuffing the distributor channels?

Wed, 05/11/2011 - 03:41 | 1262005 designerhandbag...
designerhandbagsoutlet's picture

This is a great post. you got cheap handbags online .I like cheap designer handbags as well give you designer handbags outlet

Wed, 05/11/2011 - 04:02 | 1262018 ivars
ivars's picture

Some new calculation on a short term ( this and next week) silver moves between 40 and 30, very exact calculations...

A nice test case, this sharp silver mini-bubble and correction on a bull trend.

Wed, 05/11/2011 - 04:04 | 1262020 Keri at Bankste...
Keri at Bankster Report's picture

Perhaps they'll buy Volker off of us?  We do need the money...

Wed, 05/11/2011 - 05:24 | 1262077 slewie the pi-rat
slewie the pi-rat's picture

china is working full-time making the yuan good in trade deals.  they want to compete with us and print the shit and buy stuff with it.  raw materials, food, fuel.  not a bad idea, really.  especially since they probably got it from us. 


Wed, 05/11/2011 - 05:58 | 1262102 old naughty
old naughty's picture


They buy it from hu (who will sell)?

Who will take yuan when they print like the FED...Don't you know they are reading ZH?

You don't trust Ben but you will trust hu?

Wed, 05/11/2011 - 06:16 | 1262113 tip e. canoe
tip e. canoe's picture

slew, the chinese invented paper money, so they've had plenty of time to figure out the best way to manipulate with it.   and the boys in control over there been patiently waiting for their turn to use their own homegrown brand-name toy that they control all by their lonesome.

i just wonder how long they have to be the latest bully on the block before the fire of discernment turns all  the paper tigers to ashes.

Wed, 05/11/2011 - 04:49 | 1262054 silberblick
silberblick's picture

get some comedic relief regarding how to deal with banksters and the government:

Wed, 05/11/2011 - 04:55 | 1262057 writingsonthewall
writingsonthewall's picture

Sorry to interrupt Tyler - but "seek and destroy" please...

Wed, 05/11/2011 - 06:06 | 1262099 Franken_Stein
Franken_Stein's picture
Volkswagen bekommt Lizenz für Elektroauto in China

(Volkswagen receives permit to build electric cars in China)


Btw, ARIVA.DE is the most prominent German stock forum.

Topics are structured in threads like here on ZH.


If you can read German, please go to the Silver-Thread, which is to be found here:

You can also google-translate it.


It's time to join forces globally, I'm speaking of crowdsourcing here, since you and I and our way of life are threatened by globalists also.


Never forget:

Auro locquente, omnis oratio inanis est.

When gold is speaking, all other talk becomes meaningless .


Wed, 05/11/2011 - 06:31 | 1262122 Franken_Stein
Franken_Stein's picture


Oh, and before I forget it,


what the Beltway is for Washington,

what Whitehall is for the U.K.,

that is the Zhongnanhai for China.


The government compound in Beijing, with all the Ministries of Love, Truth and Peace in it.


A-hahahahaha !


Wed, 05/11/2011 - 09:31 | 1262548 Leraconteur
Leraconteur's picture

"So much for the world's largest economy no longer overheating."

Well, China is not quite yet 'the world's largest economy'.

Mon, 05/16/2011 - 20:24 | 1281196 Flesh Wound
Flesh Wound's picture

China believes it's own BS. How many empty towns do they need to create? How many more un-used super tankers are they going to build? If we could take a peak under that economic hood I bet we would find some cobwebs. 



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