【招银国际】China Economy: Deflation pressure calls for additional fiscal stimulus-250610（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 Jun 2025 CMB International Global Markets|Macro Research|Economic Perspectives China Economy Deflation pressure calls for additional fiscal stimulus May CPI remain

2、ed negative for the 4th consecutive month,indicating the mounting deflation pressure following the tariff shock.While energy prices were the primary drag,broader price levels remained subdued across categories.Durable goods prices dipped amid weakening demand and intensifying price competition,while

3、 service prices moderated after the national holidays.PPI further deteriorated due to sliding energy prices and soft domestic construction activities.The tariff shock has weakened both domestic and external demand,exerting further deflation pressure while the ramped-up supply-side production offers

4、little offset.China economy may face further headwinds in 2H25 given the intensifying deflation,softening property sector and payback effect from the trade-in scheme.China may launch additional fiscal expansion and consumption stimulus after reaching a trade deal with the US as the deal would refer

5、to a rebalance of China economy towards more consumption and less production.We estimate CPI and PPI may rise from 0.2%and-2.2%in 2024 to 0.3%and-2%in 2025.CPI stayed negative for the 4th consecutive month amid falling food and energy prices.Chinas CPI YoY stayed flat at-0.1%in May,slightly above ma

6、rket expectation at-0.17%.In sequential terms,CPI dipped to-0.2%in May from 0.1%in Apr.Vehicle fuel price was the major drag,dropping 3.7%MoM as global crude oil price remained subdued in May.We expect the vehicle fuel price to edge up in June as the NDRC has raised gas price in early June.Food pric