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China suffered a new economic shock on Sunday with the return of the threat of deflation, a day after announcing slower-than-expected growth in exports and imports.
The decline in consumer and producer price indices is a result of weak demand from Chinese consumers and investors and reflects their reluctance to spend, as confidence in future growth is undermined by the trade war with states. -United.
The figures add the challenge faced by Chinese leaders in keeping economic growth on track before the annual Central Economic Work Conference, at which policies for next year will be determined.
China's trade surplus with the United States reaches a record high
Last month, the consumer price index was down 0.3% from October, while the producer price index fell by 0.2% – the first decline in seven months – in December. because of the sharp drop in prices of crude oil and coal, according to data released by the National Bureau of Statistics Sunday.
According to official statistics, the producer price index rose only 2.7% in November, up 2.2% from the previous year.
According to analysts, deflationary pressures should continue as economic activity weakens.
Jiang Chao, an analyst at Haitong Securities, wrote in a note before the data released on Sunday that the Chinese PPI would drop to zero in December and fall to negative territory again in 2019, officially placing China in a deflationary zone.
The return of the risks of deflation, which is often associated with a contraction in economic activity, provides further evidence that the Chinese economy faces $ 12 trillion, even though China and the United States have agreed to A truce of 90 days in the trade war during trying to resolve their differences.
The official PMI, a leading indicator of economic growth, showed that activity in China's large manufacturing sector stagnated in November for the first time in more than two years, as new orders fell.
The country's exports slowed sharply last month, although China's trade surplus with the United States reached a record high, the Chinese customs administration said on Saturday.
The Chinese government has been trying since the beginning of the summer to build confidence in the country's economic prospects and has moved from the priority of debt reduction to growth.
However, signs of stress continue to grow in the economy.
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Economic data for the first three quarters of the year suggest that 19 provinces are lagging behind their annual GDP targets and that many local governments are striving to boost investment to achieve their growth targets for 2018.
The Chinese government has expressed concerns about unemployment and has promised to provide cash grants – in the form of a partial refund of unemployment insurance payments – to employers. they did not reduce their numbers.
China's economic growth also slowed to 6.5% in the third quarter of this year, up from 6.7% in the second quarter of this year.
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