The struggle against inflation still at skirmish stage

<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 the struggle against inflation is now a worldwide one, but there is more posturing than action so far.</p><p>But we should note up front that Auckland and the top half of the North Island of New Zealand is on holiday today - Anniversary Weekend. The rest of the country is working, open for business (although there may be a few in Wellington government departments taking it quite easy today).</p><p>In China, the clean-up of the Evergrande mess has taken a somewhat surprising turn. The <i>defacto </i>Beijing liquidators have turned over control of a sprawling building project near Shanghai to an American distressed debt manager, Oaktree. It was one of Evergrande's most prized assets.</p><p>Meanwhile, a growing number of Chinese construction and decoration companies are <a href="https://www.reuters.com/markets/us/china-home-builders-suppliers-issue-spate-profit-warnings-evergrande-woes-bite-2022-01-28/" target="_blank"><strong>writing off assets or issuing profit warnings</strong></a> as debt woes at Evergrande and other property developers debilitate their suppliers. <a href="https://s25.q4cdn.com/358376879/files/doc_financials/2021/q4/4Q-2021-Earnings-Release_Analyst-Slides-Final.pdf" target="_blank"><strong>Caterpillar</strong></a> have downgraded their China prospects even as they reported stronger global prospects.</p><p>The minor December improvement in their <a href="http://www.stats.gov.cn/tjsj/zxfb/202201/t20220130_1827161.html" target="_blank"><strong>official factory PMI</strong></a> reversed in January, taking it back to a stall, neither expanding nor contracting. Similarly, the <a href="http://www.stats.gov.cn/tjsj/zxfb/202201/t20220130_1827161.html" target="_blank"><strong>official services PMI</strong></a> slipped back too, but at least it is still expanding.