【招银国际】China Economy: Persistent deflationary pressure-250710（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 Jul 2025 CMB International Global Markets|Macro Research|Economic Perspectives China Economy Persistent deflationary pressure Chinas YoY CPI bounced back to positi

2、ve territory in June while its MoM growth remained negative.Energy prices rebounded while food,durable goods and services remained lethargic.PPI slumped to the two-year trough albeit with rising energy prices.Industries with a high export share faced higher deflationary pressure,while fierce supply-

3、side competition remained in most sectors.Deflation pressure may continue to accumulate due to weak consumer demand and softening global trade,despite policymakers recent efforts to curb disorderly competition from the supply side.China economy may face further headwinds in 2H25 given the intensifyi

4、ng deflation,softening property sector and payback effect from the trade-in scheme,in our view.China may gradually shift its policy framework towards economic rebalancing with consumption stimulus and capacity reduction after the country could reach a trade deal with the US.We expect a further 10bps

5、 LPR cut and 50bps RRR cut in 4Q25 to boost the property sector and consumption.We estimate that CPI and PPI may rise from 0.2%and-2.2%in 2024 to 0.3%and-2%in 2025.CPI returned to positive amid rebounding energy prices.Chinas CPI YoY edged up to 0.1%in June from-0.1%in May,better than market expecta

6、tion at 0%.In sequential terms,CPI remained negative at-0.1%in June compared to-0.2%in May.Food price further dropped 0.4%MoM in June as pork price dipped 1.2%MoM.High-frequency data indicated continued declines in vegetable prices by 0.5%MoM in early July,while pork ex-factory price rebounded.Vehic