Data released from China overnight showed that the nation is continuing to experience a slowdown from both the consumer and producer angles. The consumer price index printed at -0.20% month over month, meaning deflation has set in with the annualized figure declining to 1.20% from 1.50% prior. The contraction in producer prices was even sharper with the comparable producer index printing at -4.60% year over year. As China faces a slowing economy, the country is focusing more on developing its influence abroad vis-à-vis its “One Belt, One Road” initiative. The ambitious plans to connect Europe, Asia, and Africa with a more modernized silk road encompasses investment in infrastructure, transportation links, telecommunications networks in a vast effort to find new markets for its vast overcapacity. As domestic demand seems unlikely to be boosted in the short-term, instead of investing already overbuilt infrastructure locally, the nation has set its sights on the rest of world.
China Suffers Another Setback
Daily Analysis - 09/06/2015