China's economic struggle the global wildcard

<p>Kia ora,</p><p>Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news China seems to be hamstrung with a flagging economy that is yet to respond to the stimulus administered so far.</p><p>First up, China reported its <a href="http://www.stats.gov.cn/tjsj/zxfb/202207/t20220709_1886259.html" target="_blank"><strong>June CPI inflation</strong></a> rate at 2.5%, up marginally from May, and up from 1.1% in June 2021. But if it wasn't for a +19% rise in fresh fruit year-on-year, and fuel of course (+32%), the 2022 rate may have matched the 2021 rate. The cost of fresh milk rose +0.9% but lamb fell -6.0%. China doesn't really have an inflation problem at this time, 'aided' by an economy in the doldrums. But that 2.5% June rate is their highest in 23 months. Buying heavily discounted Russian oil and gas certainly helps.</p><p>They seem to have neither inflation nor an economic expansion.</p><p>China's <a href="http://www.stats.gov.cn/tjsj/zxfb/202207/t20220709_1886260.html" target="_blank"><strong>producer cost rises are slowing</strong></a>. After rising at a rate exceeding +13% late last year, PPI inflation is now down to 'just' 6.1% in June, its slowest rise in 15 months. We should note that the pressure on the 'industrial sector' is higher (at 8.5%).</p><p>In Chinese society, <a href="https://www.scmp.com/news/china/politics/article/3184657/xi-allies-lay-out-chinese-presidents-global-risk-outlook" target="_blank"><strong>nationalist fervour</strong></a> is building ahead of the CPC party Congress. But as we have reported before, their economy is struggling and <a href="https://d321bl9io865gk.cloudfront.net/view?src=https%3A%2F%2Fanz-singletrack.s3.ap-southeast-2.amazonaws.com%2FChina_stepping_up_fiscal_policy_to_support_growth__1.pdf%3FX-Amz-Algorithm%3DAWS4-HMAC-SHA256%26X-Amz-Credential%3DAKIAZGZPZQBPX2SV22UN%2F20220708%2Fap-southeast-2%2Fs3%