Chinese New Year demand helped lift seafood prices in the country 6.2 percent month over month in February, according to consumer price index (CPI) data published by China’s national statistics bureau.
That contrasts with tepid 1 percent growth in prices across the Chinese economy, suggesting consumer demand remains sluggish.
Chinese seafood prices showed the strongest price growth in the overall food category, rising 4.1 percent year over year in February, with pork prices, by contrast, rising 0.2 percent.
Overall, the CPI rose 0.8 percent year over year in February, but food prices were down 0.9 percent.
In an uncertain economic climate, more Chinese consumers are paying back their mortgages; for the first time in 20 years, the country’s total outstanding mortgages fell in December, according to data published by the country’s central bank.
The meeting of the National People’s Congress in Beijing set a 5 percent GDP growth target for 2024 – a figure the country will be unlikely to achieve with the ongoing slump in its real estate sector, which is a traditional driver of growth.
China’s giant manufacturing sector is also facing weak domestic demand, undermining local employment and wage growth. Economic officials in both the E.U. and U.S. are worried this will lead to dumping of excess Chinese production on Western markets.
A recent research note from the Chinese offices of investment bank Natixis outlined the conundrum facing Beijing.
“It is likely that China will step out of a negative CPI growth in 2024 if food price can stabilize. However, the gap between supply and domestic manufacturing demand is bound to continue, which does not bode well for overcapacity and deflationary pressures down the road,” it said. “All in all, the market's attention should go beyond reading the headline inflation figures toward the increasingly unbalanced growth model of the Chinese economy, which is deflationary in the manufacturing sectors.”
