In the middle of the intensified trade dispute with the United States, China’s economy continues to fight with deflation.
As the statistics office in Beijing announced, the consumer price index in March fell by 0.1 points compared to the same month of the previous year. Analyst: No change was expected inside. Already in February the consumption prices had given in more than expected.
Beijing’s statisticians: Inside, the development with more fresh foods based on the market due to warmer weather and with a lower oil price. Ing-Bank analyst Lynn Song wrote that the index had not made the jump over the zero limit under the existing price pressure. Together with an escalation of the tariffs, there is a suitable time window for the Chinese Volksbank to loosen monetary policy again, he said.
Exchange programs for more consumption
Deflation is the opposite of inflation. This leads to consumers: getting more for their money inside. Economists consider such development to be harmful in the long term, since companies earn less what can threaten wages and jobs. In addition, consumers are more likely to hold back when buying unused goods, hoping for further falling prices. The economy can then brake as a whole.
China has been fighting with a weak domestic demand for a long time. Beijing was therefore priority for consumption for consumption for this year. At the moment, for example, the government is trying to improve the buying mood against new devices or cars with an exchange program. However, Lynn expected that the measure should not contribute to a higher price level, since it subsidizes consumption with discounts.