China consumer inflation unchanged amid anti-price war campaign

Straits Times

3 days ago

Sign up now: Get ST's newsletters delivered to your inbox
BEIJING – China's consumer prices held steady in July as deflationary pressures eased on the back of a government pledge to contain excessive competition.
The consumer price index was unchanged from a year earlier, the National Bureau of Statistics said on Aug 9. The median estimate of economists surveyed by Bloomberg was for a 0.1 per cent decline. Inflation ended a four-month falling streak in June, turning positive.
Factory deflation persisted into a 34th month, with the producer price index falling 3.6 per cent, matching June's decline.
Price wars are intensifying deflationary pressures in China, where consumer demand remains fragile. The government has launched campaign to curb the cutthroat competition among businesses that's eroded profits and driven down wages the world's second-biggest economy.
China's top leadership vowed at its monthly gathering in late July to ramp up management of overcapacity in key industries but faces a challenge in reflating the economy, and more aggressive efforts to boost domestic demand may be necessary.
The state's campaign also seems to have had little effect on people's perceptions, with the price expectation index, based on a central bank survey of households, in decline since late last year.
A broad measure of prices across the economy, known as the GDP deflator, has declined for nine straight quarters, its longest streak in decades.
Top stories
Swipe. Select. Stay informed.
Singapore Four men arrested in Bukit Timah believed to be linked to housebreaking syndicates
Singapore Criminal trial of Hyflux founder Olivia Lum and five others starts Aug 11
Singapore Profile of Kpod user has shifted from hardcore drug users to young people: Experts
Tech Former data analyst creates AI tutor that assesses students based on Singapore schools' criteria
Opinion Recognising our imperfections is part of what makes Singapore whole
Opinion I used to be impatient. Then I became a granddad
Business The risks of using 'decoupling' to own two properties
Asia Manila struggles to keep a lasting hawker culture, casts eyes on how Asian nations lifted street food
Resilient demand for Chinese goods overseas has helped the economy hold up surprisingly well
in the face of US tariffs, but industrial profits are deteriorating as companies struggle to pass on rising costs to consumers, given weak spending power and poor sentiment.
Fierce rivalry at home, fueled by excess industrial capacity, has driven exporters to slash prices to boost sales, drawing sharp criticism from abroad and deepening trade frictions.
The Communist Party's decision-making Politburo, led by President Xi Jinping, listed the goal of addressing 'disorderly competition' among companies as one of its top priorities when it set the economic policy agenda for the rest of the year at its meeting last month.
'The big picture would remain the same – there is still a long way to go before the economy escapes deflationary pressures. Policymakers are recognszing that 'fixing disorderly competition' is key to addressing the roots of deflation – and more steps may follow,' said Bloomberg analyst Eric Zhu.
Mr Xi issued a call in July to 'break involution,' using a term for a destructive state of intense competition sparked by excess capacity that forces people to overwork despite diminishing returns.
The president has also questioned the need for local governments to crowd into the same emerging industries, such artificial intelligence and vehicles powered by alternative-energy sources. BLOOMBERG