Inflation in China Slowing Down

Keeping Inflation Under Control in China

In December 2011 inflation in China was slightly lower, paving the way for Chinese economic policy to continue in its careful path of slightly relaxing its generally tight control, helping to support the slowing Chinese economy.

Investors in China, including Benjamin Wey of New York Global Group (NYGG), carefully monitor the ongoing behavior of the Chinese economy and policymakers in their efforts to predict how the Chinese economy will perform in the future.

In December consumer prices rose in China by only 4.1 percent, the lowest inflation in the past 15 months especially compared to the peak in July of 6.5 percent. December’s low inflation was the fifth month in a row of shrinking inflation.

"This continued moderation in price pressures is a welcome development and will increase the scope for policy to respond should growth start to weaken more sharply in coming months," commented one analyst.

One third of the total Chinese consumer price index is determined by the price of food, which was actually higher in December, going up by 9.1 percent over rate in December of 2010, and compared to 8.8 percent this past November. Analysts believe much of the increase was due to the fact that this year Chinese New Year was earlier in 2012 than what is usual, fueling earlier holiday shopping which contributed to the price rise for food.

"Consumer price inflation is not the key concern for policymakers for now. Growth is slowing down quickly as imports in December indicated," said one economist. "Policy is clearly in an easing cycle."

Urbanization Driving Force in China's Economic Development

Nanjing Road, Shanghai

Investors in China today, such as Benjamin Wey, President of the New York Global Group (NYGG), are carefully watching every development towards affluence which China is experiencing. One such trend taking place now is the move towards urbanization. After 30 years of economic and social progress the majority of Chinese now live in cities and towns and not the countryside, for the first time in Chinese history.

The program to bring China into a more prosperous economic situation was accomplished partly by encouraging farmers to seek a more affluent lifestyle in urban centers and towns, and the plan seems to have worked. Today the globe’s most populous country has 690.79 people living in urban areas while only 656.56 Chinese live in rural areas, according the Chinese Bureau of Statistics.

The explosion of Chinese affluence which has investors like Ben Wey paying close attention was begun in the 1970s when Deng Xiaoping began introducing capitalist reforms into what had previously been a staunchly Communist economic society. Over the past three decades over 200 million citizens of China were freed from the oppression of poverty, helping to change the country into today’s second largest global economy; only the Unites States surpasses it. China is, however the world’s largest consumer of copper, steel and coal.

"Urbanization has been a fundamental driver behind China's economic growth," said one analyst.

Luxury Sales in China Reaching New Heights

While the rest of the world is suffering from a global economic downturn, China is experiencing unprecedented growth and development. Savvy investors knowledgeable with the Chinese market, such as the New York Global Group (NYGG) with Benjamin Wey, are carefully watching the consumer base in China grow, both in numbers and in wealth.

The numbers show that the world of affluence that the west has enjoyed for so many years is now heading to the east. In 2010 the value of luxury goods sold in China was 212 billion yuan, ($33.5 billion), with an increase in growth for this sector in 2011 estimated to be somewhere between 25 and 30 percent. Even more incredible and relevant to investors is the fact that new customers made up about 60 percent of those making luxury purchases. High-end brands such as Cartier, Van Cleef and Arpels, and Christian Dior are entering the Chinese market place at an amazing pace, some brands showing as much as a 30 percent increase in sales last year, a perfect opportunity for investors.

One leading investment firm believes that within five years China will be the location of the world’s largest market for luxury consumer goods. Most of the growth will continue to come from new buyers, and the rise in the number of wealthy consumers as well as the ballooning number of middle class customers will continue to fuel the growth of China’s economy as a whole in exciting ways, for years to come.

Ben Wey, the New York Global Group and other financial investment firms with a special focus on China, will certainly pay attention to the evolving economic giant which China is fast becoming.

Chinese Growth Rate Slowing a Bit as China Enters New Stage in Development

Slow Growth Expected to Help Consumers and Consumer-base Companies

The Chinese target growth rate was lowered last Monday to reach only 7.5 percent in 2012, an eight year low. China’s premier said that one of the priorities for the coming year will be “expanding consumer demand” instead of fast-paced growth. The decision was taken in the wake of a decade of consistent building of China’s infrastructure and enlarging the country’s exports, which was the major focus of the Chinese economy.

Although putting the brakes on the second largest economy in the world may freeze today’s global stock market rally, building a strong consumer base in the giant Chinese market will most likely benefit many sectors of the economy, from mobile phone companies to frontier markets.

It is likely that this move will set the stage for China to enter a new phase in the development of its economy, taking China from today's manufacturing based economy to one that is more consumer based.

"What we're looking for is slower growth but higher profitability. That's the next big transition in China," said one analyst.

Benjamin Wey Discusses Investing in Precious Metals in China

In an interview on the online news program “The Street China Watch” Benjamin Wey of the New York Global Group was asked his opinion about investing in the precious metals sector in China.


China Watch: How poised for growth is China’s precious metals sector for the future? How important do you think it is for investors to take a look at the precious metals sector?


Ben Wey: I think as awareness in the consumer world continues to grow in China then precious metals and other things that have to do with consumer growth really are interesting as well.


China Watch: Can you expand a little? We already touched on LJ International and Gushon, can you expand a little bit on the outlook for companies like this as the precious metals sector continues to grow?


Ben Wey: I do understand that JJD is a symbol for LJ International and I understand that JJD just recently reported fantastic domestic growth in China. I believe the precious metals business and the jewelry business will tend to do well because Chinese consumers, when they get wealthier, they want to look better, they want to dress better. That’s consumer access.


China Watch: That’s just another play on the Chinese growing middle class, and the growing Chinese consumer. That is correct?


Ben Wey: Absolutely correct!


China Watch: Thank you very much.