1. China’s consumer prices fell at the fastest rate in 15 years in January, missing analysts’ forecasts and underlining the challenges for policymakers trying to revive investor confidence in the world’s second-largest economy. The country’s consumer price index fell 0.8 per cent year on year in January, according to official statistics released on Thursday, the fourth straight month of declines and the biggest contraction since 2009. The fall, which was steeper than a 0.5 per cent drop forecast by a Reuters poll of analysts and a 0.3 per cent decline in December, comes as China’s economy contends with an extended property sector slump, a stock market meltdown and weaker export revenue. (Source: ft.com)
2. The Economist:
Already this year, more than $1 trillion in market value has been wiped from exchanges in China and Hong Kong. On February 5th the Shanghai Composite plummeted to a five-year low. All told, the index is down by more than a fifth since early 2022. And as miserable as the performance of Chinese stocks has been for most of their three-decade history, the present downturn feels different.
That is because China’s economic prospects are gloomier than at any point in recent history. The dire state of the property market is the chief problem. Prices and sales have fallen for more than a year; officials have failed to stop the correction. During the stock rout in 2015 retail investors had a slogan: “Sell your stocks and buy real estate”. No one is chanting it now. Worse still, government rescue plans do not look up to the task.
For many citizens, it feels as if China never truly emerged from its dismal zero-covid years. An economic recovery that was expected to play out in 2023 faltered during the first half of the year. Pessimism has clouded the market ever since. Goldman Sachs, a bank, recently asked a dozen local clients—asset managers, insurers and private-equity types—to rate their bearishness towards China on a scale of zero to ten, with zero being equal to their outlook during the lockdowns of 2022. Half gave the country a score of zero; the other half said three. (Source: economist.com)
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