Beginning in March 2012, China’s PPI was in negative territory for 54 consecutive months. In fact, China’s PPI has been negative for the better part of the last decade. More striking, China’s producer price index (PPI) fell by 2.5% year on year in March – its sixth consecutive month of decline. In the first quarter of 2023, China’s consumer price index (CPI) rose by only 1.3% year on year – down from 1.8% in the previous quarter. There is plenty of pessimism about China’s economic prospects nowadays, with many warning – not without reason – that China has entered a deflationary period. And with the right policies, China can do even better. While that hardly matches the robust growth of the pre-pandemic period, it did exceed market expectations. BEIJING – According to China’s National Bureau of Statistics, the economy grew by 4.5% year on year in the first quarter of 2023.
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