China braces for stagflation

<p>Kia ora,</p><p>Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news senior Chinese officials are openly talking about stagflation risks.</p><p>A senior adviser to the Chinese central bank said at an online forum it is "very likely" that their economy will be in stagflation if producer prices stay high while demand stays weak, and they are alert to existing risks to their economy being "released too early".</p><p>And China’s fiscal revenue fell in October for the second straight month as their economic recovery slows, but fiscal spending returned to growth. In particular, the government’s revenue from land sales slid for the fourth consecutive month.</p><p>Meanwhile, the IMF is noting that "downside risks are accumulating" in China as its economy slows.</p><p>That doesn't seem to be putting off investors however. Inbound FDI is rising, even if it is off a pandemic-affected base which makes it look better that it otherwise is.</p><p>In the US, we should note that the Biden Administration is about to decide whether to reappoint Jay Powell as head of the US Fed, or switch to one of his deputies Lael Brainard. There is a lot of lobbying underway at present and a decision is promised in the coming week, possibly today. Brainard is viewed as more dovish than Powell, and the financial markets will price that in if she is chosen.</p><p>The global supply-chain issues seem to be easing. Not only are key freight rates retreating (slowly) on shipments out of China, but the backlog of ships waiting to unload at key US West Coast ports has halved. And Administration efforts to clear these ports seem to be working, even if there are a few rough edges. Efforts to recycle empty containers with sweeper ship voyages are helping too. The holiday season rush will naturally ease as well, so the worst may be behind us. But the effective closure of Vancouver is a