Chinese inflation eases as trade growth slows dramatically

Figures indicate sluggish economy is a global problem

Chinese workers assemble electronics.
Chinese workers assemble electronics in a Foxconn plant. Photograph: Getty Images

China's inflation rate continued to fall in April, down to 3.4 per cent from 3.6 per cent in March. The rate remains below the Government's official target of 4 per cent, and well below the high of 6.5 per cent last June. Food prices fell 0.9 per cent from March, while non-food inflation was now 0.3 per cent over the same period.

Li Wei, an economist with Standard Chartered in Singapore, said of the figures:

Right now, the whole economy is leveling out after a rough first four months, even though the pace of prices coming down is relatively slow. The central bank is likely to turn its focus more to slowing growth.

The news follows the release yesterday of the Chinese trade data. While both exports and imports continue to grow, the rate of increase has dropped: exports grew by 4.9 per cent year on year, while imports grew by just 0.3 per cent. This had the effect of widening China's trade surplus, even while it represented an unexpected slowdown of the economy as a whole. Predictions for both had been as high as 11 per cent.

The export data particularly must be seen not only in the context of what it says about China's economy, however, but also the economy of the rest of the world. Chinese goods are sold in every market, so slumping growth may represent a global fall in demand. If that is the case, however, America at least is not the source; their trade deficit widened to $51.8bn in March.