Economy· Macro

China producer price index fell 0.3% in July, first time in three years

minutes 2019/08/12 12:10:46
China producer price index fell 0.3% in July, first time in three years

Aug 12, 2019 (China Knowledge) - According to the National Bureau of Statistics (NBS) , China's producer price index fell 0.3%YoY in July, the first decline on an annual basis since August 2016.

Among Chinese industries, oil and gas extraction, and paper and paper product manufacturing saw the steepest factory price declines, down by 8.3%YoY and 7.1% YoY, respectively.

With trade tension between China and the U.S. saps demand at home and abroad, Chinese manufacturers are cutting prices to keep market share. Meanwhile, falling prices for crude oil, iron ore and other raw materials also played a role.

As U.S. President Trump tweeted to impose 10% tariffs on the additional USD 300 billion in Chinese imports from next month, export orders are expected to slacken due to weak global demand.

Weakening producer prices could add to worries about debt problems and default risks for Chinese companies as economic growth hit 27-year low.\

The People’s Bank of China is expected to further cut banks' reserve requirements in coming months to free up more funds to lend. The government has also tried to ease pressure on corporate balance sheets by cutting taxes and fees.

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