5/12/2021 Financial News: Communist China’s PPI Surged 6.8% In April, Commodity Prices Continue Rising

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1.Communist China’s PPI Surged 6.8% in April

The data released by the National Bureau of Statistics on Tuesday showed that Communist China’s consumer price index (CPI) rose by 0.9% year-on-year in April. The producer price index (PPI) surged 6.8% from a year earlier, showing the fastest increase in three and a half years.

In April, the price of pork continued to fall by 11.0% from the previous month, with a year-on-year decrease of 21.4%. The core CPI, excluding food and energy prices, rose by 0.7% year-on-year in April, an increase of 0.4 percentage points from the previous month, and it has risen for three consecutive months. The PPI rose by 6.8% year-on-year, an increase of 2.4% from the previous month and the highest level in nearly 40 months. In April, the prices of bulk commodities such as iron ore and non-ferrous metals rose, and prices in the production sector continued to rise.

Tang Jianwei, chief macro analyst at the Financial Research Center of Bank of Communications, told a reporter from the Shanghai Securities News that this year’s PPI will likely reach the highest level in mid-year, and the year-on-year increase may exceed 8%.

2.Commodity Prices Continue Rising in Communist China

On May 11, commodity prices continued their upward trend, with hot coils, threads, iron ore, coking coal, and thermal coal all setting record highs. The Wenhua Commodity Index, which tracks the trend of domestic commodities, has risen by more than 17% this year, and the Wenhua Industrial Product Index has increased by nearly 22%. The downstream industry chain, from small and medium-sized enterprises to industry leaders, have all felt the pressures caused by the rising prices of raw materials.

In the spot market, after the May Day holiday, the domestic steel price surged, and the prices of billets, steel, and scrap have all reached the highest in several years. On May 11, the Tangshan billet price was 5,650 yuan/ton, a 17% increase from the beginning of April, reaching a new record high in the past 13 years. Wind data shows that as of the week of May 7, the inventory of major steel products in major cities across the country was 16.21 million tons. It has declined for nine consecutive weeks. The cumulative decrease has exceeded 27%.

3.Qitian Technology’s Abnormal Stock Trading Attracts Regulatory Attention

In the past month, Qitian Technology has experienced many abnormal fluctuations in stock trading. As the company’s stock price soared, Qitian Technology also attracted regulatory attention. The company began to suffer a loss in the first quarter of 2020, and the loss has continued to expand. In the past three years, its total losses amounted to 1.5 billion yuan. On April 9, the company published an article announcing its subsidiary Xiaoqi Oufei successfully signed an agreement with a major state-owned bank to launch a digital yuan related business and actively participate in the future development of the digital yuan. After that, in less than two months, Qitian Technology’ stock price increased 370%. Unexpectedly, on May 7, the company issued a contradictory explanation about its digital yuan business.

In addition, last night, Qitian Technology announced the two shareholders’ pre-reduction of holdings that are no more than 1.8% of the shares. Given the recent abnormal price fluctuation and stock reduction announcements, the Shenzhen Stock Exchange has requested Qitian Technology to explain the reasons for the stock reduction plan.

4.No Bid from Tesla for Additional Land

Tesla Inc had previously planned to buy land in Shanghai in order to expand its plant and establish a global export center. According to sources, this plan has been stopped due to uncertainty caused by tensions between the two countries. Three sources who declined to be named said that Tesla canceled its plan to substantially expand production capacity in Communist China, at least for now. The company did not bid for the land across from the plant in March this year.

However, Tesla said in a statement to Reuters that its Shanghai plant is “developing as planned.” Two sources said that Tesla has never indicated its intention to purchase the land across from the existing factory. One of them said that Tesla can expand the production capacity of the Shanghai plant, which still has land available, to more than 500,000 vehicles.

5.U.S. Companies Continue to Face ‘Implicit Bias’ in Communist China

American Chamber of Commerce in China (AmCham China) released on Tuesday its 23rd annual white paper on the state of American business interests in Communist China. “While we recognize very significant improvement in terms of written policy, there is also that next level of implementation that doesn’t always follow the spirit and actual word of the policy,” said Greg Gilligan, AmCham China’s chairman.

According to the white paper, foreign businesses continue to suffer “implicit bias” in China, despite the government’s policies designed to create a more equal environment for foreign investment. AmCham China, which represents the interests of 500 U.S. businesses in Communist China, finds that “rising tensions in U.S.-China relations” was the top concern among its member companies in 2020. 78% of survey respondents ranked it first.

6.U.S. Job Openings Reached Record High in March

The Labor Department reported Tuesday that the number of job openings reached a record high in March as employers struggled to fill those positions. The number of job openings increased from February by 597,000, or 8%, to 8.12 million. But new hires rose only 215,000, or 3.7%, to slightly more than 6 million.

In March, government job openings jumped to 833,000, 26.6% higher than February. Retail jobs also grew while education and health services experienced declining job openings. The total openings rate as a share of the labor force went up to 5.3% from 5%. Growing concerns about filling job openings may make the economic recovery slower than anticipated. Goldman Sachs economists commented that “labor supply appears to be tighter than the unemployment rate suggests, likely reflecting the impact of unusually generous unemployment benefits and lingering virus-related impediments to working.”

By 【Financial Team – Kate】
News Collection: Wendy, Kate

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