China has not caused deflation, said a major China investment strategy report issued by BNP Paribas Peregrine Tuesday.
Raymond Foo, managing director and regional strategist of BNP Paribas Peregrine Securities Limited, told reporters while launching the report, "Of all the accusations hurled at China, this is the most amusing.... While it is a fact that China is suffering from deflation, we are of the view that it is a fiction that China is a big exporter of deflation. China is far from being the largest exporter."
The report insinuates that someone else may, in fact, be the culprits causing global deflation.
"Concerns that WTO membership would see China-made goods flood the world and cause global deflation due to cost competitiveness are exaggerated. For a start, China is not the largest exporter in the global market - that honor belongs to the United States, followed by Germany and Japan.
"The US export value is more than three times China." it stressed.
China's main export goods include electronic appliances, toys, footwear and apparel, and "if export of such products that are relatively inexpensive caused global deflation, it would be a sad day for the global economy," the report said.
"Most of China's export goods are final goods, not intermediary goods. As such goods are destined for the ultimate consumer, they do not contribute to the work-in-progress costs, unlike intermediate goods that usually contribute to either higher or lower prices," it said.