Bloomberg Daybreak: Asia Edition China Producer Prices Signal Further Deflation
Jan 9, 2025
Mark Konyn, Chief Investment Officer at AIA Group, shares insights on the alarming deflation in China's economy, highlighting 2.3% drops in producer prices and the impact on consumer confidence. Gene Goldman, Chief Investment Officer at Cetera Financial Group, contrasts China's consumer demand strategies with those of North America and Europe during the pandemic. They also discuss cautious investment strategies for 2025, the challenges of stagflation, and the importance of diversification to manage market uncertainty.
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China Deflation
- China's wholesale inflation continues to deteriorate, signaling deflation.
- Producer prices fell by 2.3% in December, slightly above the expected -2.4%.
China Property Market Overhang
- China's deflation stems from excesses in the residential property market.
- Government policy in 2024 focused on ensuring banking system resilience.
China Consumer Confidence
- Roughly $20 trillion of individual savings sits in cash in China's banking system.
- This indicates low consumer confidence and reluctance to spend or take risks.