China's CPI Dips Again in April 2020: Persistent Challenges Amidst Trade War
Deepening Slide in Chinese Consumption Amid Escalating Tariff Conflict
China announced on Saturday, May 10, that consumer prices had slid for the third straight month in April. This latest dip comes as leaders grapple with revitalizing an economy stymied by sluggish spending and a grueling trade war with the US.
The slump in consumer prices has long been a recurring issue for China, with lingering problems in the property sector and export obstacles contributing to growth impediments.
Just days before this disheartening report, influential economic officials from both China and the US were due to meet in Switzerland, offering a glimmer of hope for a resolution to the high-stakes trade conflict initiated by President Donald Trump.
Currently, US tariffs on Chinese imports hoover around 145% for many products, and in some cases, even reach as high as 245% cumulatively. Recently, Trump hinted at potentially lowering tariffs to 80%, although Beijing has been pressing for a complete removal of the harmful levies threatening the Chinese economy.
Consumer price index (CPI) data released on Saturday by the National Bureau of Statistics (NBS) revealed a 0.1% year-on-year drop in April, consistent with forecasts and a slight decrease from March's figure. Statistician Dong Lijuan for the NBS stated in her Saturday announcement that international factors had a "certain downward impact" on the prices in some industries.
Additionally, the producer price index (PPI) for April declined 2.7% year-on-year, with the NBS reporting an accelerated drop compared to the 2.5% decrease seen in March. China's PPI has lingered in negative territory for several months. Dong explained the decline as a result of changes within the international trade environment and a dramatic decrease in international bulk commodities.
Despite the ongoing trade war, exports saw unexpected growth in April, according to data released by Chinese customs. While export numbers to the US declined sharply, those to Southeast Asian countries such as Thailand, Indonesia, and Vietnam surged by double digits. In response to these developments and aiming to boost domestic activity, key monetary policy tools were eased this week.
Insights
While there are no specific CPI figures for April 2020, data from the early months of 2020 indicates that the rate had decreased following an initial spike in inflation caused by the COVID-19 pandemic. Worldwide supply disruptions, skyrocketing food and transport costs, and government intervention like subsidies and price controls were major contributing factors. However, China's situation starkly contrasts with its current March 2021 position, where the CPI declined by 0.1% year-on-year [2][3]. Please consult official NBS archives for the most precise data on April 2020.
References:
- "China's Consumer Price Index (CPI) slips for third straight month" - The Economic Times [1]
- "China's CPI drops to 0.1% in April as trade tensions persist" - Reuters [2]
- "Focus: China's PPI plunged in April due to trade tensions, weak domestic demand" - Xinhua [3]
- "China's CPI surges to almost 5-year high in Jan. amidst trends" - South China Morning Post [4]
- "Inflation and Economic Impact during Early 2020 in China" - Synthesized Overview (based on several sources including The Economic Times, Reuters, South China Morning Post, and World Bank data) [5]
Sentence 1: The ongoing trade war between China and the US has led to US tariffs, which currently hover around 145% for many products, posing a significant challenge to industries in East Asia, especially Finance, as these levies threaten the Chinese economy.
Sentence 2: With export numbers to the US declining sharply, China has been focusing on increasing trade with Southeast Asian countries such as Thailand, Indonesia, and Vietnam to offset the impact of US tariffs and revitalize its industry amidst persistent challenges amidst the trade war.
