TRANSFORMATION:Premier Li Keqiang sought to address economic slowdown fears, but warned that China is not immune to international market changes
Date Sep 11, 2015
By: AFP, BEIJING
China’s factory gate prices fell at their fastest rate in six years last month, the government
said yesterday, as Chinese Premier Li Keqiang (李克強) warned that transforming the world’s second-largest economy is going to be a “painful and treacherous” process.
However, Li expressed confidence the country would hit its expansion target of around seven percent, as Beijing looks to soothe fears about a growth slowdown that have rocked global financial markets in recent weeks.
Moderate inflation can be a boon to consumption as it pushes buyers to act before prices go up, while falling prices encourage shoppers to delay purchases and companies to put off investment, both of which can hurt economic expansion.
However, prices for China’s factory-produced goods have fallen as growth has slowed and overseas demand slackened, while the key property market has also weakened, hitting demand for construction materials. Plants — many of them state-owned — are also loath to drastically cut employees, leading to continued production even when demand is weak. [FULL STORY]