Until there s a reset in household spending, businesses will not be able to raise prices much, he explained. This is essentially gonna be a problem on the production side and, you know, specifically the factory side.
That hurts the amount of money manufacturers can make.
Official data on Wednesday showed China s producer prices surging 9% in May compared to a year earlier, the fastest since September 2008.
Miller said the inflation situation in China right now is very focused and centered on commodities, as well as factories which were being squeezed on cost. Yes, there s an inflation issue. Yes, it s gonna be tricky for some of the parties in China. But specifically … it s on the production side. It has not moved over to consumer side, he said. It s a fairly specific problem in China right now, even if it s rather intense for the time being.
For China’s Small Businesses, Life Is Still Far From Normal
Smaller businesses are proving to be a weak link in China’s economic recovery as they struggle to fully bounce back from the effects of Covid-19.
Like the U.S., China has tens of millions of small and medium-size private businesses, including restaurants and shops, which form the backbone of everyday economic activity. They account for as much as 80% of urban jobs and at least half of China’s tax revenue.
While businesses have benefited from China’s strong rebound this year, many are still trying to overcome weak consumer demand, rising operating costs and tight credit from banks that don’t want to sink more money into wounded companies.