China’s weekend data signal weakening demand

HONG KONG • Economic data for China released over the weekend signal a further weakening of both domestic and international demand in November.

Factory inflation and the Consumer Price Index (CPI) slowed, while import growth slumped. Export growth also moderated, though the front-loading effect produced by tariffs still caused the surplus to the US to hit a record.

The Producer Price Index climbed 2.7% in November from a year earlier, the slowest pace in more than two years. The CPI rose 2.2%, slower than estimated, according to data released on Sunday.

Exports in dollar terms rose 5.4% in November, the customs administration said on Saturday, missing estimates. Imports grew 3%, widening China’s trade surplus to US$44.7 billion (RM186.4 billion) from US$34.8 billion. That was the highest this year.

Weaker inflation adds to evidence that demand remains sluggish despite stimulus measures to cut personal income taxes and support private sector financing. Tame inflation gives China’s central bank some room for manoeuvre should easier monetary policy be required. The space is limited though, as the yuan is vulnerable to downward pressure.

Expediting sales abroad ahead of expected tariff increases was likely still happening in November, as the US tariff hike threatened for Jan 1, 2019, was still on the table before Presidents US Donald Trump and Xi Jinping met during the Group of 20 Summit. — Bloomberg