China’s economy continues to struggle with a significant lack of demand. The latest survey data shows that the year-on-year Consumer Price Index (CPI) for August is expected to shift from flat to a decline, with a predicted mean of -0.2%. Credit demand is weak, and the scale of new social financing may decrease year-on-year.
On September 8, Caixin website released a survey report stating that pork prices continued to decrease significantly in August, and prices of non-food items such as transportation and energy were relatively soft, which might lead to a year-on-year decline in the Consumer Price Index (CPI) for residents.
A survey conducted by Caixin Media recently on 12 domestic and foreign institutions revealed that economists generally believe that the year-on-year CPI for August will shift from flat to a decline, with a predicted mean of -0.2%, compared to a 0.2 percentage point decrease in July. The forecast range is -0.3% to -0.1%.
The macro team at CITIC Securities expects the year-on-year CPI for August to decrease by around 0.3%; while the macro research report from Huatai Securities suggests that the year-on-year CPI growth rate for August may slow down to about -0.1%.
In July, China’s year-on-year CPI had already dropped to 0%, and if the August data confirms a negative turn, it will reflect an ongoing lack of domestic demand.
According to a report by Caixin on September 8, the latest results of the Caixin Social Finance Index (C50 Wind Direction Index) indicate that the market anticipates weak credit demand in August, with the scale of new social financing potentially decreasing year-on-year. Market institutions forecast the median value of new Renminbi loans in August to be 0.65 trillion yuan, down by 0.25 trillion yuan from the same period in 2024, with a forecast range of 0.4 trillion to 0.96 trillion yuan.
The report mentions that despite loose monetary policy and fiscal support, factors such as weak physical demand, a sluggish real estate sector, and external uncertainties persist. Many market experts predict that the actual credit demand in August may be slightly lower than the same period last year.
The survey results also indicate that the median forecast for new social financing in August is 2.67 trillion yuan, a decrease of 0.36 trillion yuan from the same period in 2024, with participating institutions forecasting a range of 2.21 trillion to 3.2 trillion yuan.
The “C50 Wind Direction Index Survey,” initiated by Caixin, was conducted by various research institutions in the market, reflecting market institutions’ expectations for macroeconomic trends, sentiment towards monetary policy, and financial data. Nearly 20 institutions participated in this survey.