Not only that, China is exporting deflation to the rest of the world.
From Bloomberg via MSN, July 9:
China’s producer prices fell the most in nearly two years, overshadowing a modest improvement in consumer prices and adding to the urgency to tackle deflationary pressures.
Factory deflation persisted into a 33rd month, with the producer price index falling 3.6% from a year earlier, the National Bureau of Statistics said Wednesday. The decline was the most since July 2023 and sharper than any economists had forecast.
The consumer price index unexpectedly increased 0.1% and ended a four-month falling streak, although it likely reflected the short-term effect of government subsidies rather than a lasting recovery in confidence.
The still-weak inflation may keep pressure on policymakers to ramp up stimulus to escape a vicious cycle of falling prices, business profits and wages. Cutthroat competition between companies has also added to the deflationary pressures, as they engage in ruthless price wars that policymakers now seek to curb.
The Shanghai Stock Exchange Composite Index rose as much as 0.4% to the highest level this year as investors speculated about more stimulus to ease deflation. It pared gains to trade 0.1% down at market close.
Global trade headwinds weighed on export-heavy sectors. Manufacturing prices for computer, communications and other electronic equipment accelerated a drop from the previous month. The uncertainties of US President Donald Trump’s tariff regime further cloud the outlook for companies reliant on the global markets as domestic demand remains weak.
Dong Lijuan, chief statistician at the NBS, said producer prices fell on a monthly basis in part because adverse weather conditions affected construction work and put pressure on the prices of raw materials.
Factory-gate prices for the coal mining and washing industry fell 22% year-over-year, the worst drop since 2007. The NBS attributed that to the increased use of renewable energy sources, which reduced demand for coal....
....MUCH MORE
