China News Now: China's lower-than-expected CPI signals economy continues to weaken

June 9, 12:19 pm | By gremmn

Chinaâ€™s lower-than-expected CPI signals economy continues to weaken

June 9, the New York Times today reads Chinaâ€™s lower-than-expected inflation data as a sign that the countryâ€™s economy continues to weaken, saying inflation slowed sharply in China last month as companies cut prices to cope with faltering demand, as the Chinese economy appeared to slow further.

According to the National Bureau of Statistics, consumer prices were up 3 percent in May from a year earlier, below economistsâ€™ expectations of 3.2 percent and down from an annual increase of 3.4 percent in April. Producer prices tumbled for the third month in a row, down 1.4 percent from a year earlier, a faster fall than the 1.1 percent drop anticipated by economists.

"Price pressures eased in May and the easing could accelerate in coming months. This supports the central bank's move to cut interest rates," said Zhang Yongjun, economist at China Center for International Economic Exchange (CCIEE), a top government think tank, according to the Reutersâ€™ report.

The New York Times also points out that the fading of inflation gives Chinese officials considerable latitude to stimulate the economy, releasing brakes applied to bank loans, real estate investment and other sectors over the past two years when rising prices had seemed like a threat.

Meantime, the Wall Street Journal quoted analyst to say that top policy makers in China likely have access to some economic data before they are released to the public. So China's central bank, the People's Bank of China, may have seen the weak inflation reading before it pushed interest rates lower.

Also the New York Times said It is rare for the National Bureau of Statistics to announce economic indicators on a Saturday morning, a step that gives financial markets an entire weekend to digest the results. But the Chinese agency also resorted to weekend data releases in late 2008 and early 2009, when economic activity briefly plunged at the start of the global financial crisis.

Over the last few weeks, Chinese central government has rolled out a series of initiatives to spur the economy, including new purchases incentives for energy-efficient household appliances, targeted tax cuts, and accelerated approval for infrastructure projects.

Chinaâ€™s regulators shows cautions to curb the real estate bubble, however, housing prices see rebound in major cities across the country.

The National Bureau of Statistics will release data on May industrial production and retail sales, and January-May fixed-asset investment. Chinaâ€™s General Administration of Customs has tentatively scheduled for roughly noon on Sunday in Beijing the release of export and import figures for May.