China's consumer inflation accelerated to 1.8 percent in December, according to official data released yesterday. The consumer price index had been expected to rise 1.9 percent from a year earlier, compared with an increase of 1.7 percent in November.
The producer price index rose 4.9 percent from a year earlier, compared with the previous month's rise of 5.8 percent, the National Bureau of Statistics said on its website.
Meanwhile, Moody's Investors Service said China and India will remain the fastest-growing economies in the Asia Pacific this year.
"Robust economic strength in the region and high levels of trade openness leave the region's sovereigns well-positioned to benefit from stronger global GDP growth," said Anushka Shah, a Moody's assistant vice president and analyst.
But it said medium-term challenges also relate to the ongoing rebalancing in China, which will likely continue to constrain its imports, general slowing or negative demographic trends in the region, and potential middle-income traps.
Overall, Moody's forecast a more positive prospect this year in the Asia Pacific, although high leverage remains a key credit constraint. Specifically, it expects Asia Pacific emerging markets to grow by 6.5 percent in 2018.
World Bank also upgraded its forecast for China's GDP in 2018 to 6.4 percent, 0.1 percentage point higher than its June forecast. China's economy is estimated to grow 6.8 percent in 2017. World Bank raised its forecast for global economic growth to 3.1 percent in 2018, saying a broad-based recovery was underway across the world.
However, China's yuan plunged for the second day after the fixing is removed. The central parity rate of the yuan weakened 239 basis points to 6.5207 against the US dollar yesterday, the lowest point in about two weeks.
The People's Bank of China has removed the "counter-cyclical adjustment factor" used by banks to calculate their submissions to the currency's daily reference rate.
Nathan Chow, a DBS strategist and economist, said the removal of the adjustment factor is in large part due to more balanced cross-border flow.
The "adjusted" fixing formula, alongside stricter capital controls and a retreat in the US dollar, ignited a yuan rally in the second half of 2017. That 5.8 percent appreciation since May 2017 has in turn helped shore up the country's foreign exchange reserves.