Red flags for the Chinese economy

(Dan Tri Newspaper) - China's consumer inflation rose in November, reaching its highest level in nearly two years. Meanwhile, producer price deflation worsened.

According to data released on December 10 by China's National Bureau of Statistics (NBS), the consumer price index (CPI) rose 0.7% year-on-year – the highest level since February last year, higher than the 0.2% increase in October and in line with forecasts in a Reuters survey.

Meanwhile, the Producer Price Index (PPI) fell 2.2% year-on-year, a deeper decline than the expected 2% drop and extending the deflationary streak into its fourth year. The sharp decline was mainly due to the high relative prices, but also reflected the fact that manufacturing demand and industrial activity have not yet recovered.

Core inflation (excluding food and energy prices) rose 1.2% year-on-year, maintaining the upward trend seen in October.

According to Dong Lijuan, a senior statistics expert at the National Bureau of Statistics (NBS), China's CPI improved mainly due to a 0.2% year-on-year increase in food prices, reversing the 2.9% decline in October. Meanwhile, a sharp 3.4% drop in energy prices helped to curb the overall increase.

Beijing's consumer-focused measures continue to have a certain impact, with household appliance prices rising 4.9% and clothing prices increasing 2%. However, gasoline and new energy vehicle prices fell by 2.5% and 2.4% respectively, indicating that competition and downward pressure on prices in the automotive industry remain significant.

Notably, the price of gold jewelry increased by as much as 58.4%. Observers believe that this increase reflects the trend of safe-haven assets amid a volatile economic environment.

Chinese people are choosing and buying fruit (Photo: Reuters).

On a monthly basis, the CPI fell 0.1% – lower than the forecast increase of 0.2% – due to a cooling of prices for hotels, airfare, transportation, and travel services following the extended holiday period in October.

Among the sectors experiencing the sharpest declines in ex-factory prices, coal mining and processing fell by 11.8% year-on-year, while oil and gas extraction decreased by 10.3%.

Economists warn that deflationary pressures on the world's second-largest economy could extend into next year as a sluggish property market and weak labor market continue to weigh on household spending, forcing Beijing to step up policy support, according to CNBC.

Falling house prices and a weakening labor market continue to put pressure on household spending. Observers are calling on the government to introduce further stimulus measures.

China's economic growth slowed to its lowest level in a year in the third quarter, but is still considered likely to reach its growth target of around 5% thanks to a recovery in exports as factories ramp up shipments to markets outside the US.

Over the past 11 months, China has recorded a trade surplus of more than $1 trillion, surpassing its all-year record set in 2024, despite navigating an increasingly barrier- and protectionist global trade environment.

In a meeting earlier this year, Chinese officials stated that boosting domestic demand and rebalancing supply are top economic priorities for 2026.

Source: https://dantri.com.vn/kinh-doanh/dau-hieu-do-cua-kinh-te-trung-quoc-20251210165734491.htm