A customer selects vegetables at a supermarket in Mengzi City, southwest China’s Yunnan Province, Feb. 9, 2025.
Xinhua News Agency | Xinhua News Agency | Getty Images
Consumer prices in China slid 0.1% year on year in March, remaining in deflationary territory after having contracted 0.7% in February.
Economists polled by Reuters had expected a flat reading compared to the same period last year.
Producer prices saw a larger-than-expected decline, falling 2.5% year on year in March. This is the largest contraction since November 2024, and also marked the 29th straight month that producer prices have been in deflationary territory.
The Reuters poll had expected a 2.3% contraction.
The data comes as U.S. President Donald Trump ratcheted up tariffs on Chinese imports to 125% overnight, up from 104%. Hours earlier, China had retaliated by hitting the U.S. with an 84% tariff on Wednesday.
Following the data release, the onshore yuan weakened to trade at 7.35 against the dollar, while the CSI 300 was up 0.82%.
Earlier in March, Chinese Premier Li Qiang had delivered an annual report on government work that named boosting consumption as the top task for the year ahead, as the country set an ambitious target of “around 5%” growth.
That’s the first time in a decade that Beijing has given consumption such high priority, said Laura Wang, chief China equity strategist at Morgan Stanley. She added that the government work report cited “consumption” 27 times — the most mentions in a decade.
While Beijing has not followed the U.S. or other countries in handing out cash to consumers, Chinese policymakers have increasingly acknowledged the need to counter deflationary pressure at home.
In a bid to spur domestic consumption, Chinese policymakers in March doubled subsidies for a consumer trade-in program to 300 billion yuan ($41.47 billion) this year. The subsidies will go toward around 15% to 20% of the purchase price for select products, including mid-range smartphones and home appliances.
That’s an expansion from last year’s 150 billion yuan program, announced in the summer, for a narrower range of products.
China must focus more on domestic demand given the possibility of “new shocks” to overseas demand, Shen Danyang, head of the drafting group of the Government Work Report and director of the State Council Research Office, told reporters in March in Mandarin, translated by CNBC.
Chinese officials had said meeting the growth target would require “very arduous work,” according to a CNBC translation of their statement in Chinese. The situation has been further complicated by heightened trade tensions between Beijing and Washington.
This is breaking news. Please check back for updates.
— CNBC’s Evelyn Cheng contributed to this report.