Deflationary pressure is getting worse – Victor Shih

While China’s bean counters try to stress positive figures in its economic development, assistant-professor Victor Shih sees very troublesome signals as prices for industrial goods fall by huge percentages over the first three months of 2009. From his weblog:

I strongly suggest readers take a close look at it. There is still some incomplete reporting though. For example, capital goods on the PBOC website shows a price increase of 0.1%, but the price of industrial goods decreased in March. What’s the relationship between the two? Instead of getting industrial output figures, we find some data on individual categories of industrial outputs, like cars, buses, and TVs at the end of the table. We find that the MoM price of washing machines stayed the same while the price of TVs fell in March…etc. What about other industrial goods used by firms, like heavy machineries?? In a way, this is very disappointing. I think China has made great strides in statistical reporting, but when things get bad, they return back to their old game: obfuscation. Of course, all governments are tempted to do so when things get bad!

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Victor Shih is a speakers at the China Speakers Bureau . When you want to tap into his insights, do let us know.