The Guardian - China-China has seen a fourth month of falling prices but will it act to curb deflation
February 8, 2024 3 min 548 words
中国经济在农历年初再次出现消费价格下跌，这已是连续第四个月。媒体关注龙年是否能为中国经济注入活力，但同时也提出了经济是否会迎来刺激计划的疑问。随着消费者价格的下跌，一些经济学家呼吁政府采取刺激措施，然而，北京可能会坚持经济增长新常态。尽管中国的零防疫政策已于一年多前放弃，但消费者仍然对购买商品和房产持谨慎态度。一些经济学家担心，中国需求的持续低迷可能会对全球产生连锁影响，尤其是在北京政策制定者试图通过大力发展工业制造来抵消房地产领域的下行趋势之际。然而，中国已经宣布不会采取大规模刺激计划，而是将重点放在实现“高质量增长”上。在这种情况下，人们期待着中国即将召开的全国两会，预计2024年的经济增长目标将与去年的5%相似，这可能成为中国经济的新常态。
China’s economy has gone from bad to worse – and it is only February.
Figures released on Thursday showed consumer prices fell by 0.8% in January compared with a year earlier, outstripping economists’ expectations and marking the biggest contraction in 15 years.
Prices in China have been flat or falling nearly continuously since July. Although the country’s zero-Covid policy was abandoned more than a year ago, consumers are still cautious about spending, both on everyday goods and on property, which has traditionally been the driver of growth in China’s gross domestic product. Income growth has slowed, and high unemployment rates are pushing down wages for some workers.
Some economists are worried that persistently low demand in China could have knock-on effects around the world as it may start to rely on demand from other countries to revive its economy.
That concern is especially acute as Beijing policymakers have tried to offset the downward spiral in the property sector by betting big on industrial manufacturing, particularly in green technologies such as electric vehicles and solar panels. Banks are being encouraged to increase lending to manufacturers, while loans to the real estate sector have decreased. A surge in exports could exacerbate tensions around trade tariffs and dumping. The UK is already investigating whether Chinese excavators are being sold at unfairly low prices, while the European Union has launched an anti-subsidy inquiry into Chinese electric vehicles, a move that has caused consternation in Beijing.
“China needs to take actions quickly and aggressively to avoid the risk of deflationary expectation to be entrenched among consumers,” Zhiwei Zhang, chief economist at the Hong Kong-based asset manager PinPOINT, told Reuters.
The National Bureau of Statistics of China said the year-on-year drop in consumer prices was partly explained by the fact that in 2023 the lunar new year holiday, which traditionally boosts spending, fell in January. This year it starts on 10 February.
Analysts are now looking at whether the year of the dragon will breathe some much-needed fire into the belly of the Chinese economy. Food prices in particular, which fell 5.9% in January, are expected to get at least a short-term boost as people gather for festive feasting. One of the biggest drags on prices was pork, which slumped by 17%.
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But the longer term strains in China’s economy are proving stubborn. Unlike previous downturns, Beijing has not stepped in with a massive stimulus package. The Chinese president, Xi Jinping, says he wants to focus on “high quality growth” rather than the double-digit acceleration that China experienced in the early 2000s. All eyes are now on the Two Sessions, the country’s annual parliamentary meetings that start on 5 March. The growth target for 2024 is expected to be similar to last year’s 5%. That is modest by Chinese standards, but it may be the new normal for the world’s second-biggest economy.