China’s latest economic data, which showed another heavy fall in factory-gate prices and a surprise slump in exports, will put pressure on the central bank and other authorities to unveil new policy support measures.
According to official figures released Sunday, China’s producer price index fell 5.4 percent in July from a year earlier. It was the worst reading since October 2009 and marked the 40th straight month of price decline.
Meanwhile, exports tumbled 8.3 percent in the same month, their biggest fall in four months, as weaker global demand for Chinese goods and a strong yuan policy hurt manufacturers, Reuters reported.
“Policy focus is definitely the (producer) deflation at this stage,” Zhou Hao, an economist at Commerzbank in Singapore, was quoted as saying.
The People’s Bank of China (PBoC) may need to cut interest rates again, he said.
The world’s second-largest economy is officially targeted to grow at 7 percent this year, still strong by global standards, but some economists believe it is growing at a much slower pace.
Economists expect the PBoC to cut rates by another 25 basis points this year, and further slash the reserve requirement ratio for commercial banks by another 100 basis points, according to a Reuters poll last month.
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