High trading costs still hinder flow of funds to real economy

According to official data, the national consumer price index for August, an indicator of inflation, has risen above 2 percent, for the first time in the past 14 months. While the producer price index, a barometer of the manufacturing industry, remains below zero. Comments:

A more detailed analysis of the data shows that pork and fresh vegetables, two major foods, have pushed the consumer price index higher by 1.05 percentage points, while the index without such foods remains 1.1 percent, the same as last month. However, the producer price index continues to fall, which sends a warning about a possible decline in industries. Therefore it is too early to assert that China faces inflation. On the contrary, the economy remains weak and needs more proactive financial measures.

Ma Guanyuan, economist and deputy director of the China National Democratic Construction Association's economic committee, Sept 13