Prices in China Fell for the First Time Since 2009

The main indicator of inflation in China, is the consumer price index (CPI), contracted by 0.5% year-on-year in November. It saw its first decline since October 2009, according to official data published this Wednesday by the National Bureau of Statistics.

In October, this indicator had already registered its advance since that month eleven years ago. Mainly, it was due to the fall in pork prices, for the first time after 19 months of increases. Pork is one of the favorite meats of Chinese consumers.

In mid-2018, the swine fever epidemic caused the death of tens of millions of pigs in China. It resulted in severe problems in production. Pork’s output dropped to its lowest in 16 years.

The recovery of China’s pig herd after the epidemic caused tremendous volatility in meat prices. With as many as 60% of its breeding sows gone by the second half of 2019, production of pigs slumped. The first fall had been 2.8% year-on-year. In November, the drop was much higher, reaching 12.5%.

However, pork prices had been appreciated by 25.5% in September and 52.6% in August.

Overall, food prices fell 2% in November after rising 2.2% in October, representing the first decline since January 2018.

Meanwhile, the prices of other types of products also included in the CPI dropped by 0.1%.

The National Bureau of Statistics also released the producer price index today. It is a measure of wholesale inflation, which marked its smallest drop since March, falling by 1.5% in November.

Compared with the previous month, wholesale prices rose by 0.5%, which represents a return to the month-on-month expansion after they did not register any variation in October.

Biden will not immediately withdraw tariffs on China

President-elect Joe Biden stated that he would maintain the first-phase trade agreement with China while conducting a full US policy review toward the Asian country.

Biden said he would not immediately cancel the trade agreement President Donald Trump made with China earlier this year. The same applies to tariffs. He assured he would first conduct a full review of the first phase agreement and then consult with the country’s allies in Asia and Europe to develop a coherent strategy. The best strategy for China is to put all of the allies on the same page, the president-elect said.

Biden noticed that during the first weeks of his presidency it would be a priority to get back on the same page with allies.