Authorities suggest that China’s recovery is patchy
The rising commodity prices had a negative impact on the performance of Chinese industrial companies during May.
The impact drips into other parts of the Chinese economy, increasing concern over inflationary pressures.
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According to data from China’s National Bureau of Statistics, profit levels for Chinese industrial companies increased by 36.4% in the same period last year. Official data showed a slowdown compared to a 57% increase the previous month.
The rise in raw material prices appears to be narrowing margins in China’s industrial business.
Authorities suggest that China’s recovery is patchy, despite the fact that China’s recovery appears to be the first from the block, as the rest of the world has been caught up in the coronavirus pandemic .
“The Foundation for Recovery is not solid yet,” said Zhu Hong, a staff member of the Bureau of Statistics.
Also, concerns remain amid the ongoing debate among central bankers about interest rate hikes that it is causing an outbreak of inflation around the world.
The Bank of England has recently predicted inflation to exceed 3%, exceeding its “temporary period” target.
However, the news did not motivate the Bank of England to act urgently by tightening its policies.
“The economy will experience a temporary period of strong GDP growth and CPI inflation beyond its target. After that, growth and inflation will recede,” the Financial Policy Committee said.
Meanwhile, US consumer prices rose the highest during May since 2008 as concerns about inflation escalated.
Pent-up demand in the US faces a shortage of products used in the manufacturing processes of major commodities, from wood and steel to chemicals and semiconductors.
The Fed now expects interest rates to rise about 12 months earlier than previous expectations in 2023.
China is the second largest economy on the planet, but continues to have a major impact on the functioning of the world.
Chinese policymakers are doing their best to contain spiral metal prices, such as changing supplies from government reserves. However, as demand recovers again, the impact of these efforts may not touch on the side.
