Deflation threat threatens coughing economic growth

In China Consumer prices fell in February compared to a year ago, according to the figures released by the State Statistics Authority. Price development turned into deflation for the first time in more than a year.

Prices fell by 0.7 percent from February last year, which was more than expected experts. According to the statistical authority, the decline was influenced, among other things, by the Chinese New Year’s hit this year in January and the fluctuations of the world market price of some products.

The decline in prices strengthens the fears that the deflation cycle threatens China’s coughing economic growth. Private consumption in China has been mild throughout the pandemic, and economic growth has been largely dependent on exports, which has pulled record well. Now the trade war with the United States also creates additional challenges for the export industry.

US president Donald Trump Has slipped extensive import duties for Chinese products, and China has responded by prescribing duties, for example, for certain US agricultural products.

Chinese Prime Minister Li Qiang On Wednesday, it announced that the country is pursuing about 5 % economic growth this year. According to experts, this goal can be difficult to achieve in current economic conditions.

China has also set a 2 % inflation target for this year. Achieving it would require consumption to recover from the current level.