Chinese inflation eases, leaving room for stimulus

Consider this: according to a report from Credit Suisse, there are now 109 million adults in the Chinese middle class. That officially makes China home to the largest middle-class population in the world, larger than that of the us and Canada combined.

Separately, Singapore’s trade ministry reported brighter-then-expected growth figures: The nation’s economy grew 0.1% on year on a seasonally adjusted basis, narrowly missing a technical recession, compared with a 2.5% contraction in the second quarter. Concerns about China’s slowdown in August helped spark a selloff in stocks around the world, and sharp swings continued through last month.

The German Chamber of Commerce in China said in the survey released Tuesday in Shanghai that German carmakers with a high market share in China had been relatively immune to market fluctuations since the global financial crisis in 2008, but are now being affected. On the flip side, a few economists buck that view and believe consumption and service-sector growth are being underestimated by the government. Growth in the quarter ending in June held steady at 7 percent.

The bureau has changed the way quarterly gross domestic product data is calculated, a move it calls a step to adopt worldwide standards and improve the accuracy of Chinese numbers.

Demand for credit in China has remained weak despite five interest-rate cuts and three broad reductions in bank reserves since November.

Analysts will be looking for signs as to whether momentum is still fading or if the economy may be slowly stabilizing. That was down of from August’s 2 percent increase.

He suggests the adoption of the updated accounting system – something that was originally scheduled to occur between late 2014 to early 2015 – may have been delayed due to the Chinese government continuing to set annual growth targets.

“Monetary policy will be loosened as the economy faces downward pressure, and easing inflation will create bigger room for monetary policy loosening”, Xu Gao, chief economist at China Everbright Securities, said in a research note.