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Moderate Inflation in China

According to the Chinese government, inflation was 2.7%. This is lower than the government’s target inflation level of 3.5%.

What does this mean? This is good news for investors in China, it means that the government has more room for stimulus.

Why? When central banks purchase bonds they release cash into the economy, more cash results in a decreased value of the currency, otherwise known as inflation.  Lower than targeted inflation mean the government can continue to stimulate the economy in order to foster growth.

As a result the Shanghai Composite is up 0.36%.