In other gloomy China ratings news, S&P Global on Wednesday dealt the battered property sector a further blow as it slashed developer China Vanke’s credit rating to junk. S&P cut the rating of the country’s second biggest developer by sales by a hefty three notches to BB+ from BBB+.
On the geopolitical front, U.S. President Joe Biden and Japanese Prime Minister Fumio Kishida on Wednesday touted increased joint military cooperation and a new missile defense system, in what looks like a united front against China and Russia.
Investors’ attention on Thursday turns to China, with Beijing scheduled to release producer and consumer price inflation figures for March.
Factory gate prices have been in outright deflation, on a year-on-year basis, since October 2022, and annual consumer price inflation has been mostly negative for almost a year.
The annual PPI rate is expected to have declined to -2.8% from -2.7%, according to a Reuters poll. Annual CPI inflation is expected to have cooled to 0.54% from 0.7%, while consumer prices are expected to have fallen by 0.5% on the month.
If accurate, these figures show deflationary pressures still loom large over the Chinese economy, pointing to over capacity or lackluster demand. Or a bit of both.
