China's factory gate prices shrank for the first time in three years in Jul...
BEIJING - China’s factory gate prices shrank for the first time in three years in July, stoking deflation worries and adding pressure on Beijing to deliver more stimulus as the economy sputters amid an intensifying trade war with the United States.
Zou expects the price contraction to worsen in the coming months due to stricter curbs on the property sector, as regulators try to rein in debt risks and tame rising home prices. Prices for some major building materials such as steel reinforcing bars were weak in July as high temperatures and rain stalled construction projects.While trade data on Thursday showed China’s exports unexpectedly returned to growth in July, analysts warn the rebound could be short-lived as Washington prepares to slap even more tariffs on Chinese goods. Indeed, China factory activity suggested no let-up in pressure, with export orders dwindling due to weak global demand.
The central bank is expected to further cut banks’ reserve requirements in coming months to free up more funds to lend, on top of six reductions since early 2018. The government has also tried to ease pressure on corporate balance sheets by cutting taxes and fees.
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