China's economic recovery remains fragile

China's consumer prices were unchanged in September, while factory-gate prices posted annual declines for a third straight month, highlighting the uneven post-Covid recovery of the world's second-largest economy, which may require additional political support, according to CNBC.

The National Bureau of Statistics in Beijing announced on Friday that the consumer price index (CPI) for September remained constant compared to the previous year, while Reuters analysts had expected a 0.2% increase. The CPI rose by 0.1% in August, this being the first annual increase in the three months ending in August.

However, China's core inflation - which excludes energy and food prices - rose by 0.8% in September, at an annual rate, according to the cited source. This growth rate was similar to that recorded in August.

At the same time, the producer price index in China fell by 2.5% in the ninth month of the current year, compared to September 2022, with expectations showing a decline of 2.4%, after the 3% recorded in August. The drop in prices at the factory gate was, however, the smallest in the last seven months.

The evolution of prices shows what China's leaders have described as a "winding" economic recovery after the country eliminated "zero-Covid" restrictions at the end of last year.

The dynamics of inflation announced on Friday may fuel fears that China is on the brink of deflation, notes CNBC.

"Zero CPI inflation indicates that deflationary pressure in China is a real risk to the economy," said Zhiwei Zhang, president and chief economist of Pinpoint Asset Management, quoted by CNBC, adding: "The recovery in domestic demand is not solid, without a significant boost such as fiscal support. Damage to consumer confidence, generated by the slowdown in the real estate sector, continues to affect household demand."

• China's export decline is easing

The decline in China's exports moderated in September, according to data published by Reuters, which shows that, last month, the Asian country's foreign deliveries fell by 6.2% on an annual basis. Analysts were expecting an 8% decline.

China's imports fell by 6.2%, September being the seventh consecutive month of decline. In August, exports fell by 8.8%, and imports - by 7.3%.

China's trade surplus reached $77.7 billion in September, up from $68.36 billion in August. Analysts were anticipating a surplus of 70 billion dollars.

The mentioned data reflect an improvement in global demand for Chinese products, but fears remain about the need for new incentives, in the context of the slowdown of the world economy and the depreciation of the yuan.

Last week, the International Monetary Fund (IMF) downgraded its forecast for China's GDP growth to 5% this year, from 5.2% it previously estimated. For next year, the forecast is 4.2%, compared to 4.5% - the previously estimated level.

The official target of the Government in Beijing regarding the growth of China's economy in 2023 is about 5%.