The consumer shrinkage in China deepens with a weak demand despite motivation

Consumer prices in China decreased for a fourth consecutive month in May, like Beijing Motivation measures It seems insufficient to increase local consumption, as price wars in the auto sector add a declining pressure.

The consumer price index decreased by 0.1 % from the previous year, according to Data from the National Office for Statistics issued on MondayCompared with the average estimate of a 0.2 % decrease among the analysts included in Reuters.

Consumer price index Slide In February, he decreased by 0.7 % from last year, and continued to decrease annually by 0.1 % in March and April.

However, basic inflation, with the exception of food and energy prices, increased by 0.6 % in May – the highest since January of this year, according to wind information.

Separately, the shrinkage in the price of the factory or products in the country has deepened, A decrease in 3.3 % of the year Earlier in May, a decrease in analysts’ expectations was 3.2 % decrease. Wholesale prices have been in the shrinkage area since October 2022, according to LSEG data.

Chihye Zhang, president and chief economist at Pinpoint Asset Management, said, regardless of the constant weak demand for consumers, the car’s car price war has kept the prices lower.

Chinese policy makers urge the auto industry Stop wars warsAnd that harmed the profitability and efficiency of companies, which led their prices to a decrease.

“The price of prices in the auto sector is another sign of the intense competition prices that drive its prices,” Zhang said, adding that the decline in real estate prices also contributed to the pressure in the decline in consumer prices.

While the exports were strong, “in the end China needs to rely on domestic demand to fight backbiting,” Zhang added.

On May 7, senior Chinese financial organizers launched a set of policy steps aimed at strengthening the country’s economy that struck the customs tariff. Reducing the Chinese Central Bank The main interest rates are 10 basis points To low historical levels and reduced the proportion of reserve requirements, which determine the amount of cash banks that must be kept in reserves, by 50 basis points.

US President Donald Trump escalated the customs tariffs on Chinese goods to exorbitant levels of 145 %, which prompted Beijing to take revenge on the duties and other restrictions, such as export controls on its critical minerals.

On May 12, the economy was relieved after we had concluded a first deal in Geneva, Switzerland, which led both sides to drop the majority of definitions. Washington reduced its fees on Chinese goods to 51.1 %, while Beijing fell on US imports to 32.6 %, according to the research tank Peterson Institute for International EconomyAllow some space for both sides to negotiate a broader deal.

The Chinese Deputy Prime Minister and the main trading representative is Lifeng It is expected to meet with the American Trade negotiating team led by Treasury Secretary Scott Bessin in London Later in the day for renewable commercial conversations.

The second round of meetings comes after the tensions erupted again between the two sides, where they accused each other of violating the Geneva Agreement.

Washington blamed Beijing for a slow walking in its pledge to agree to export the additional critical metals of the United States, while China has criticized the US decision to impose new restrictions on Chinese student visas and additional export restrictions on chips.

The Chinese Ministry of Commerce said on Saturday that it will achieve it Continue review and approval Rare Earth export applications, referring to the increasing demand for minerals in the sectors of robots and new energy vehicles.

Since the temporary truce with the United States appears fragile, the markets are monitoring whether Beijing will offer more cash to enhance the economy.

In an article published last week, China Journal of the State Securities Managed by the country PBOC said RRR may drop later this year to support growth, and it may soon end for months in the circulation of government bonds. It was the central bank The purchase of the parked bonds in January Try to reduce the revenues of the sunken bonds and the weak currency.

The eyes will be at the annual Lujiazui Forum, which will be held later this month in Shanghai, where it will present the best financial organizers in China, including the ruler of PBOC Pan Gongsheng, major speeches. Shanghai government officials told reporters last month The main financial policies will be revealed in the forum.

China is also scheduled to report its commercial data for the month of May later on Monday, which is expected to show that exports increased by 5 % on an annual basis, while imports decreased by 0.9 % from the previous year, according to a poll held in Reuters.

Evelyn Cheng from CNBC contributed to this story.