Though China has not slid into deflation, the government will make further efforts to defuse potential risks, lawmakers and political advisors told the annual sessions of the country’s national legislature and political advisory body recently.

"Deflation is often the result of long-term accumulation of structural problems in economic operation, not affirmed solely on one or two price indicators," said Huang Maoxing, a deputy to the 14th National People's Congress and vice president of Fujian Academy of Social Sciences.

He rejected the view about deflation occurring as completely misleading, a state-controlled media outlet reported.

China's consumer price index (CPI) rose by 0.2 per cent last year. The core CPI (excluding food and energy prices) rose by 0.7 per cent year on year (YoY) in 2023, indicating overall stability in the supply and demand of industrial products and services, said Jin Li, a national political advisor and vice president of Southern University of Science and Technology.

The country’s CPI rose by 0.7 per cent YoY in February this year, reversing a 0.8-per cent decline in January, and went up by 1 per cent on a monthly basis, expanding by 0.7 percentage points from that in January, according to the National Bureau of Statistics.

Though supply of products is sufficient, demand is constrained by unstable expectations, according to Price Association of China vice chairman Xu Guangjian, who attributed the decline in prices largely to the time gap between the recovery of supply and demand.

Although weak CPI performance is deemed temporary, more work must be done to take precautions against deflation risks, and resolve the inadequacy of effective domestic demand and overcapacity in some industries, lawmakers and political advisors feel.

Fibre2Fashion News Desk (DS)

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