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China: producer price index and exports fall


China: producer price index and exports fall


A double data blow for China has left experts predicting the central bank will have to further stimulate the country’s economy.

The producer price index in July fell 5.4 percent from a year earlier according to the National Statistics Bureau. It was a sharper drop than expected, the worst reading since October 2009 and the 40th straight month of price decline.

Exports tumbled 8.3 percent in the same month, their biggest fall in four months.

“Two-thirds of global growth came from the emerging markets themselves over the last five years and those economies have been slowing quite sharply. So Brazil and Russia have been in recession or are forecast to be in recession this year.

‘So a lot of demand for those natural exports from China have disappeared. But the picture’s pretty much the same elsewhere, it’s not just from China. But other – shall we say – countries with large trade positions are also going through the same problem,” explained Sean Darby Chief Global Equity Strategist, Jeffries.

The country’s consumer inflation rate hit its highest level this year in July edging up to 1.6 percent from 1.4 percent the month before. The government said it was due to rising food prices. Beijing’s target is about 3 percent.

The gloom in the world’s second largest economy could deepen this week as a raft of data is forecast to show renewed weakness in factories, investment and domestic spending.

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