China's consumer prices recorded a second month in a row, while the deflation of the producer prices was further anchored, since Chinese exporters set more pain in the middle of an escalating trade war with the USA
The consumer price index fell by 0.1% in March a year in the year and remained according to data that was published by the National Statistics Bureau on Thursday.
Economists surveyed had expected a flat reading compared to the same period last year.
The producer prices fell in the 29th month in a row, fell by 2.5% in March compared to the previous year and marked the greatest contraction since November 2024.
The Reuters survey had expected a decrease of 2.3%.
The core inflation that increases the volatile food and fuel prices rose by 0.5% and recovered from a decrease of 0.1% in February, although in January it is still lower than the growth of 0.6%.
“We are more of a deviation between the consumer prices and the producer prices,” said Tianchen XU, Senior Economist at Economist Intelligence Unit, and added that the core prices of consumers have stated, while the producer prices should deteriorate in view of the trade disorder.
“Chinese exporters essentially compete for a smaller global market,” he added.
The US President Donald Trump has set tariffs for Chinese imports to 125% overnight, compared to 104%. Hours earlier, China got into the USA with a tariff of 84% on Wednesday.
The data signal a “potential turning point, which is driven by political stimulus measures, in particular initiatives to increase consumption,” said Bruce Pang, Adjunct Associate Professor at the Chinese University of Hong Kong.
“In view of the latest political obligations to contain the aggressive price and additional strategies to promote budget expenses, the CPI will have further signs of gradual recovery in the coming months,” said Pang.
In the meantime, the deflationary pressure of producer prices should exist in view of the uncertainties about oil prices and external demand in relation to the ongoing trade voltages, said Pang.
After the data release, the Onshore Yuan hovered near several decades at $ 7,3469 after he had reached his weak level since 2007. The offshore -yuan weakened the dollar by $ 0.23% to 7,3611.
The CSI 300 from mainland China rose by 1.6%, while the Hong Seng index of Hong Kong in the middle of a broader recreation in the Asian markets rose by 3.9%.
In March, the Chinese Prime Minister Li Qiang provided an annual report on government work in which consumption was called the top task for the coming year, since the country set an ambitious goal of “around 5%” growth.
This is the first time in a decade that Beijing has made consumption so high, said Laura Wang, Chief China Equity strategist at Morgan Stanley. She added that the government report quoted “consumption” 27 times – most mentions in a decade.
Li Daokui, Mansfield Freeman Professor of Economics at Tsinghua University and former consultant of the People's Bank of China, told CNBCS “The China Connection” on Thursday that Beijing prepared further incentive measures that are preparing for the promotion of domestic consumption that will be introduced shortly.
With increasing tariffs that are raised by the United States, Beijing will double or even quadruple its intensity of increasing domestic consumption, “said Li, expecting” announcements from the State Council within 10 days “.
In order to promote domestic consumption, the Chinese political decision-makers in March doubled the subsidies for a consumer trade-in program to 300 billion yuan ($ 41.47 billion) this year. The subsidies are transferred to around 15% to 20% of the purchase price for selected products, including smartphones and household appliances.
This is an expansion of the 150 billion Yuan program of last year, which was announced in summer for a closer product range.
China has to concentrate more on domestic demand, since “new shocks” are suitable for overseas in overseas, said Shen Danyang, head of the design group of the state working report and director of the research office of the State Council, reporters in March in Mandarin, translated by CNBC.
Chinese officials had said that he would require the growth target “very tedious work”, according to a CNBC translation of her testimony in Chinese. The situation was further difficult by increased trading voltages between Beijing and Washington.
“While the political decision-makers signaled the willingness to do more to support domestic demand, many financial expenses are still dedicated to the expansion of the offer of the economy,” said Julian Evans-Pritchhard, Head of China Economics at Capital Economics in a note.
“It is unlikely that consumption support will be sufficient to compensate for weaker exports. As such, the overcapacity will deteriorate and tighten the pressure on prices down,” said Evans-Pritchhard.
– Evelyn Cheng from CNBC contributed to this report.
Comments are closed.