China Seeks to Halt Consumer Price Rally — Failure Is Likely

Chinese officials have unveiled a full arsenal of measures to taper down consumer prices, but strategists expect this to fail, Bloomberg reported.

• China, in the last three weeks, hiked transaction fees, adjusted tax regulations, censored industry research, called on producers to unload inventories, and pushed trading firms to reduce wagers.
• The measures seek to address the surge in commodity prices covering coal, glass, and steel rebars which have soared to record highs.
• The high prices are affecting China’s export manufacturing and could likely impact economic recovery from the COVID-19 pandemic.
• Strategists at both Goldman Sachs Group Inc. and Citigroup Inc. believe the attempts will likely fail due to supply constraints and high global demand.
• Goldman strategists said China has lost its power to control key commodities prices, including oil and copper. It advised clients to “Buy the China-led dip.”
• China has since been successful in its efforts after rebar and coal prices have dropped 22% from their May highs.