Message or massage? What’s the value of a price signal before China’s Communist Party congress?
The heavy hand of the state has given some industries a leg up, putting a rosier glow on the economy as party delegates get ready to gather in Beijing
At face value, the 6.9 per cent rise in China’s producer price index (PPI) for September, the last economic signal before the Communist Party’s twice-a-decade national congress, was a sign of the country’s robust economic health, analysts said.
But the monthly indicator also papered over an issue critical to the economy’s future: state intervention in the market, they said.
Amid such intervention, Chinese economists are divided over the value of the PPI data and other figures. While some argue that China is entering a new boom cycle, others say price rallies are unsustainable if they are engineered by supply cuts without a rise in real demand.
The PPI, a measure of factory-gate prices, has come back to life since September last year after registering no growth for the previous 54 months.
The revival has buoyed many struggling coal mines and steelmakers and put a rosier glow on the world’s second-biggest economy.