Asia: China stumbles on worse inflation data

Chinese stocks stumbled on news that consumer inflation unexpectedly slowed in August, with the Shanghai composite down 0.29%.

Inflation fell to a four-month low in August, according to the latest figures from the National Bureau of Statistics of China, with growth in the consumer-price index slowing to 2% year-on-year, from the 2.3% increase in July that was expected to continue.

Inflation continues to be some way short of the 3.5% annual inflation target set by the government in March.

Furthermore, China’s producer price index slipped 1.2% in August, the 30th consecutive month it has showed a decrease and worse than the 0.9% fall that was forecast.

Some better news came from elsewhere, with automobile sales hitting 1.71m units in August, up 4% year-on-year, and a launch date eight years away was also set for China's first space station.

Also, reports emerged that China and Russia are planning to build one of the largest ports in north-east Asia on Russia's Sea of Japan coast, according to the state-run People's Daily Online, with an expected capacity comparable to Le Havre in France.

The new seaport will be situated on the Russian coast of the Sea of Japan, according to AFP, 18km from the Chinese border.

More worryingly, a survey on Wednesday from Genron and China Daily showed that a majority of Chinese (53%) and almost a third of Japanese respondents believed China and Japan were likely to go to war by 2020.

Japan's Prime Minister Shinzo Abe recently announced the cabinet planned to "reinterpret" the country's pacifist post-war strategy, which limits its troops to a defensive role.

The Nikkei closed 0.76% higher overnight as the yen continuied to decline against the dollar, with the greenback hitting a six-year high.

Sentiment was also boosted by Bank of Japan governor Haruhiko Kuroda who, after meeting with Prime Minister Abe, reiterated the central bank's stance on monetary policy.

The BOJ "will not hesitate to take all necessary measures to adjust monetary policy, including additional easing, if the bank finds it difficult to achieve its 2% inflation target", according to the Japan Times.