China's Factory Inflation SOARS & BoC Meeting Awaits

“China’s industrial product prices continued to rise in May, as commodity prices, including international crude oil, iron ore and non-ferrous metals rose sharply, and domestic demand recovered steadily,” Dong Lijuan, an economist with the statistics bureau, said in a statement.

Of the 9% year-on-year growth, base effects contributed 3 percentage points and new price hikes contributed 6 percentage points, she said.

Domestically, the pass through from PPI to consumer prices has been limited, given that the link between the two has weakened.

Intense competition among smaller businesses, spurred by the rise of e-commerce, and weak domestic demand means China’s factories are absorbing rising input costs rather than passing them on to consumers at home.

Rising producer costs and strong export demand could give Chinese manufacturers more leeway to hike prices, adding to global inflation worries.

Secretary of State Antony Blinken told a House committee on Monday about the plans for trade talks. “We are engaged in conversations with Taiwan, or soon will be—on some kind of framework agreement,” Mr. Blinken said in response to a question from Rep. Andy Barr (R., Ky.) during the virtual hearing.

Mr. Blinken declined to elaborate and referred questions about details to Katherine Tai, the U.S. trade representative, who wasn’t at the hearing. A spokesman for Ms. Tai’s office said that strengthening relations with Taiwan is important, though “we have no meetings to announce at this time.”

Senate Majority Leader Chuck Schumer and Senator Todd Young, an Indiana Republican, were working out in the Senate gym, discussing how the U.S. could respond to the rise of China, when they first hit upon the idea that grew into a nearly $250 billion bipartisan competitiveness bill that passed the chamber on Tuesday evening.

The measure authorizes about $190 billion for provisions to strengthen U.S. technology and research - and would separately approve spending $54 billion to increase U.S. production and research into semiconductors and telecommunications equipment, including $2 billion dedicated to chips used by automakers that have seen massive shortages and made significant production cuts.

The bill must pass the House of Representatives to be sent to the White House for Biden to sign into law. It is not clear what legislation in the House will look like or when it might take it up.

The bill has a number of other China-related provisions including prohibiting the social media app TikTok from being downloaded on government devices, and would block the purchase of drones manufactured and sold by companies backed by the Chinese government. It would also allow diplomats and Taiwanese military to display their flag and wear their uniforms while in the United States on official businesses.

It would also create broad new mandatory sanctions on Chinese entities engaged in U.S. cyberattacks or theft of U.S. intellectual property from U.S. firms, and provides for a review of export controls on items that could be used to support human rights abuses.

"Minimum taxes for thee but not for we"