【招银国际】China Economy: Deflation spiral continued-250110（7页）.pdf

1、 PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG:RESP CMBR OR http:/.hk 1 MN 10 Jan 2025 CMB International Global Markets|Equity Research|Market Strategy China Economy Deflation spiral continued Deflation Spiral C ontinued Chinas Dec CPI furth

2、er declined,approaching the contraction territory amid soft food and energy prices.Core CPI growth sustained its recovery thanks to the surging home service and tourism price heading into Chinese New Year(CNY).PPI dipped again in Dec on a sequential basis,while its YoY decline narrowed.Downstream se

3、ctors remained subdued dragged by soft durable goods price,especially autos.The falling 10Y Treasury yield reflected the extremely weak market expectations for future economic growth and inflation,despite the governments pivot to more aggressive stimulus measures.In light of this,the current stimulu

4、s seems insufficient to pull China out of its deflationary spiral.In the short term,the“wait and see”stage should continue and the scope for further policy easing appears to be nearing its limit.We expect the next significant policy push is likely to be the countermeasure against tariffs imposed by

5、Trump,possibly with stronger direct support to households and consumers.We expect Chinas CPI and PPI to recover from 0.2%and-2.2%in 2024 to 0.6%and-0.3%in 2025.CPI edged down due to weak food and energy prices.Chinas CPI YoY growth dipped to 0.1%in Dec from 0.2%in Nov,in line with market expectation

6、.CPI in 2024 remained flat as 2023 at 0.24%,marking another year of persistent deflationary pressure.In sequential terms,CPI stayed unchanged.Vehicle fuel price dropped by 0.3%after 0%MoM in Nov.Food price declined by 0.6%MoM in Dec after dropping 2.7%.Pork prices may remain muted as inventories of