On 10/12, China's National Bureau of Statistics (NBS) announced that the consumer price index (CPI) for November rose 0,7% year-on-year. This marks the highest level since 2/2024. This rate is three times that of October and aligns with economists' forecasts in a Reuters survey.

However, the producer price index (PPI), which reflects factory-gate prices, continued its decline, falling by 2,2%. The PPI's downward trend has extended into its fourth year, highlighting the challenges Chinese officials face in revitalizing domestic demand amidst prolonged trade tensions.

A staff member at a Christmas decoration stall in Yiwu, China. Photo: Reuters

Economists warn that deflationary pressure in the world's second-largest economy is expected to persist into next year. China's inflation only began to rebound in October, following four consecutive months of decline. Core CPI, which excludes volatile food and energy prices, increased by 1,2% year-on-year. This figure remained unchanged from October.

Falling home prices and a weak labor market continue to exert pressure on household spending. Observers are urging the government to implement additional stimulus policies.

Nevertheless, strong exports to non-US markets are projected to help China's gross domestic product (GDP) achieve its target of "around 5%" growth this year. The country's trade surplus for the first 11 months exceeded 1 trillion USD, higher than last year. China is reorienting its trade amidst rising global protectionism.

During a meeting earlier this year, Chinese officials stated that boosting domestic demand and rebalancing supply are top economic priorities for 2026.

"While favoring easing, officials do not appear to be leaning towards large-scale policies," noted Lisheng Wang, an economist at Goldman Sachs. He suggests that Chinese officials might continue to discuss potential easing next year, while also strengthening compensatory policies for the real estate and employment sectors.

By Ha Thu (based on Reuters, CNBC)