China Center Dataflash: Beware of the Chinese New Year Effect

  • Authors:
    Andrew Polk
  • Publication Date:
    February 2012
  • Report Number:
    China-DF-02-16-12

This China Center members-only Dataflash provides a brief interpretive summary of China’s official monthly economic data release – February 2012 (January 2012 data)

  • January inflation data came in at 4.5 percent y-o-y, up from 4.1 percent in December. The reading surprised the market to the upside, where the consensus expectation was for a 4.0 percent increase.
  • Additionally, producer price inflation, as measure by PPI, fell significantly to 0.7 percent from 1.7 percent in December, showing the lowest reading since November 2009. 
  • China’s trade contracted for the first time since 2009. However, this data in particular should be read with caution due to the substantial seasonal effect of the timing of the Chinese New Year holiday.
  • Credit expansion also came in under expectations, but overall credit conditions may be better than is widely believed.
  • Industrial and Investment data were not released for January, but combined January-February statistics will be released next month.
  •  From a business standpoint, it is essential not to read too much into headlines that report weaker economic data from January. We expected the data to look bad due to seasonal effects, and it did.

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