BEIJING: China’s factory-gate prices posted the steepest drop in six months in April while consumer prices fell for a third month, underlining the need for more stimulus as policymakers grapple with the economic toll from a trade war with the US.
A prolonged housing market downturn, high household debt and job insecurity have hampered investment and consumer spending, keeping deflationary pressures alive. Now, the economy is also facing increasing external risks from trade barriers.
However, there are hopes for a de-escalation of tensions as US-China trade talks begin in Switzerland on Saturday, Reuters reported. The producer price index dropped 2.7 per cent in April year-on-year, worse than a 2.5 per cent decline in March but was less than economists’ forecast for a 2.8 per cent fall, National Bureau of Statistics data showed on Saturday.
“China still faces persistent deflationary pressure,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management. “The pressure may rise in coming months as exports will likely weaken.”