There are two pieces of news on the Chinese economy that today stand out in the eyes of economic operators: the first, relating to the last quarter of 2011, concerns the thinning of foreign exchange reserves; while the second concerns data on the trend of the consumer price index.
China's central bank reports a $20,6 billion drop in foreign reserves in the fourth quarter of last year, with a decrease of 40 billion in the month of December alone, compared to the decrease of 53 billion in November and the growth of 72 billion recorded in October. Despite these sensitive, albeit significant changes, the overall trend in 2011 marked a consistent increase: 3.180 billion dollars, compared to 2.850 billion in 2010.
The second news, announced by the vice president of the China Center for International Economic Exchanges, Zheng Xinli, concerns the containment of inflation below 4%, consequent to the control of the increase in prices for the food and real estate sectors. In particular, Zheng Xinli explains that monitoring will be possible by increasing supplies of food products. All in all, Chinese consumer prices recorded the fifth consecutive drop since August 2011, reaching 4,1% in December.
Both pieces of news can be declined in different ways, depending on the point of view from which they are analysed: the decline in reserves testify to an adjustment of the yuan on international markets, but also the increasingly growing exit of hedge funds from the country of the Rising Sun; Furthermore, the low level of inflation at 4%, if on the one hand it highlights a “capable” economic and monetary policy, on the other it brings out the sharp drop in domestic demand in the real estate sector.
Only the data of Chinese fundamentals that will emerge from the first quarter of 2012 will be able to reveal the volatility of the latest indicators of 2011, as an expression of economic dynamics, or to reinforce their value.
