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China’s consumer inflation rose slightly in April, but factory prices continued to fall, as the world’s second-largest economy continues to struggle as Beijing grapples with lagging consumer demand and global trade tensions. This indicates that the recovery continues to be unstable.
The national consumer price index rose 0.3% year-on-year in April, official figures showed on Saturday, with price rises in sectors such as energy, education and tourism offsetting declines in food prices, up from 0.1% in March. This accelerated from a % increase.
China’s economy has been suffering from flat or falling consumer prices for almost a year, with the country’s 1.4 billion consumers widely choosing to save rather than spend in response to the coronavirus pandemic.
However, consumer inflation rose for the third straight month in April, suggesting some stabilization in domestic demand despite a years-long crisis in the key real estate market.
The inflation rate is better than the 0.2% expected by economists polled by Bloomberg, as President Xi Jinping is pushing to revive manufacturing, particularly in high-tech industries, to boost economic growth and offset a slump in the real estate sector. It was announced during the presentation.
The strategy has raised concerns among Western leaders about flooding their markets with cheap Chinese imports, especially as falling manufacturing prices have made Chinese goods cheaper.
Data released by the National Bureau of Statistics on Saturday showed that prices in China’s industrial sector remained in negative territory in April. The producer price index fell 2.5% last month compared to the same month last year, after falling 2.8% in March and 2.7% in February.
Analysts said prices in the all-important manufacturing industry could be a better barometer of the true health of the economy.
“Chinese manufacturers have the production volume, but they don’t have the price,” said Chen Long of Beijing-based research firm Plenum.
He added: “Real GDP growth looks pretty decent, but if you look at nominal GDP growth and corporate profits, they’re producing a lot, but they’re not making much money because prices are falling.” he added.
He pointed out that first-quarter profits of Chinese companies listed on domestic exchanges, excluding the financial industry, fell 5% from a year earlier.
Data released on Thursday showed that China’s dollar exports rose 1.5% in April compared to the same month a year ago, but analysts say export growth in recent months has been closer to 10% or even lower. He said it was more than that. The trend is fueling new tensions with China’s most important trading partners, including the European Union and the United States.
French President Emmanuel Macron and European Commission President Ursula von der Leyen earlier this week warned Mr Xi during his continental visit that the EU needed to protect itself from cheap Chinese imports. . In the United States, the Biden administration plans to increase tariffs on electric vehicles and other green energy imports from China next week.
In response, Mr. Xi dismissed the concerns of Western leaders. He told German Chancellor Olaf Scholz last month that Chinese exports were helping ease global inflation, and this week told European leaders that China did not have an overcapacity problem.
