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China's Inflation Holds Steady in May, Prompting Calls for More Stimulus to Boost Demand
China's inflation holds steady in May, but weak demand persists, prompting calls for more stimulus measures.
ND
by News Desk
2024-06-12
China's Inflation Holds Steady in May, Prompting Calls for More Stimulus to Boost Demand

China's consumer inflation remained stable in May, while producer price declines eased, indicating ongoing challenges in stimulating domestic demand amidst an uneven economic recovery. Despite various support measures, weak consumption has kept consumer prices subdued since 2023, largely due to the lingering effects of a prolonged property sector crisis.

 

Economists emphasize the necessity of stronger and coordinated fiscal and monetary stimulus to sustainably drive up demand. However, the latest data highlights persistent deflationary pressures, driven by weak domestic demand despite improvements in commodity prices.

 

Zhiwei Zhang, chief economist at Pinpoint Asset Management, notes that the improvement in producer prices is primarily driven by commodity prices, rather than reflecting robust domestic demand.

 

Beijing has implemented several measures to spur demand, including incentives for the housing sector and consumer goods trade-ins, as well as initiatives to promote job creation and youth employment. However, challenges persist due to industrial overcapacity and the lingering effects of the property crisis.

 

Analysts expect Beijing to unveil more support measures in the coming months to achieve its GDP growth target and foster a sustainable rebound. However, they emphasize the necessity of a comprehensive policy package covering fiscal, monetary, and property sectors to inject confidence and stimulate household and business spending effectively.
Tagged:

inflation

EconomicRecovery

ChinaEconomy

Stimulus
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