The Asia Report is supported by Cathay Pacific
[credit provider=”IceNineJon on flickr” url=”http://www.flickr.com/photos/iceninejon/4151713972/”]
Sales of household appliances soared a massive 179% in China in March, according to China Daily. One of the key reasons behind the surge: A government program meant to stimulate rural spending on these goods.If you’re bullish on the Chinese consumer this is a fantastic data point, but if you’re more concerned about rampaging inflation, this is not good news.
China’s inflation problem may be about to get much worse, according to the China Securities Journal (via China Daily). They now project that year-over-year inflation in China could soar as high as 6% in Q2.
The People’s Bank of China hiked rates again yesterday, and appears to be targeting a real positive interest rate. They are chasing an inflation number at the moment that continues to rise, and may struggle to get to that point, however.
As inflation rises, it will become more difficult for the PBoC to limit the negative impact of its tightening policy. Growth projections stand at 9.6% for 2011, according to the Asia Development Bank’s latest report. But this target may be a bit lofty if tightening measures are really weighted toward taking down inflation, over preserving growth.