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China’s consumer inflation surged in April while factory prices continued to slide, suggesting the world’s second-largest economy is continuing its strong recovery as Beijing struggles to cope with demand. recession and global trade tensions.
On Saturday, the national consumer price index rose 0.3% year-on-year, official statistics showed. Up 0.1% in Marchwith price increases in sectors including energy, education and tourism offsetting falling food costs.
Chinese economy has been beset by flat or falling consumer prices for nearly a year, with the country’s 1.4 billion consumers widely choosing to save rather than spend in the wake of the Covid-19 pandemic.
But the third straight month of consumer inflation in April showed some stabilize domestic demand despite a multi-year crisis in the key real estate market.
The inflation reading – better than the 0.2% predicted by economists surveyed by Bloomberg – comes as President Xi Jinping leans on a manufacturing revival, especially in the industrial sector. high technology, to promote economic growth and compensate for the downturn in the real estate sector.
The strategy has sparked growing concerns in Western countries about cheap Chinese imports flooding their markets, especially as falling prices in the country’s manufacturing sector cause goods to China is cheaper.
Data from the National Bureau of Statistics on Saturday showed that prices in China’s industrial sector remained negative in April. The producer price index fell 2.5% year-on-year last month, after falling 2.8% in March and 2.7% in February.
Analysts say prices in the all-important manufacturing sector may be a better gauge of the economy’s true health.
“Chinese manufacturers have the volume but they don’t have the price,” said Chen Long of Plenum, a Beijing-based research firm.
“Real GDP growth looks pretty good, but if you look at nominal GDP growth and corporate profits – they produce a lot but don’t make a lot of money because prices are falling,” he added.
He noted that profits of Chinese companies listed on domestic exchanges fell 5% year-on-year in the first quarter, excluding the financial industry.
Data released on Thursday showed the value of China’s exports in dollar terms increase 1.5% per year in April, but analysts say export growth in volume has been closer to 10% or higher in recent months. This trend is causing new tensions with China’s most important trading partners, including the EU and the US.
French leader Emmanuel Macron and European Commission President Ursula von der Leyen warned Xi earlier this week during a visit to the continent that the EU needed to protect itself from cheap Chinese imports. In the US, the Biden administration is plans to increase tariffs on Chinese electric vehicles and other green energy imports next week.
In response, Mr. Xi dismissed the concerns of Western leaders. He told German Prime Minister Olaf Scholz last month that Chinese exports were helping to ease global inflation, and this week told European leaders that China does not have an overcapacity problem.
