China's Consumer Price Index (CPI) fell year-on-year in March for the second straight month, missing expectations despite a slower rate of decline. The Producer Price Index (PPI) drop also deepened, marking its weakest performance in four months. Academics say the data points to persistent deflationary pressure, which may worsen due to the ongoing tariff war. Exports accounted for 30.3% of China's economic growth last year, helping the country meet its 5% growth target. However, SMU Associate Professor of Finance Fu Fangjian noted that this year's trade volume will likely fall short, and a decline of under 20% would already be a positive outcome. He attributes deflation mainly to weak domestic demand. While subsidies may cushion the blow from falling exports, he emphasised the need for long-term redistribution reforms to address income inequality.
