Deflation reaches China

Consumer prices in China fell in February by 1.6 percent. That is the first time there has been deflation there in more than six years. It does mean the Beijing central bank has room to cut interest rates further to boost the economy and help companies battling a slump in overseas demand and in domestic construction. At a news conference, China’s commerce and industry ministers both used the word “grim” to describe the immediate outlook for Chinese exports and the manufacturing sector.

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