China’s Factory-Gate Prices Fall For Third Straight Year As Xi’s Economic Model Stumbles

In China, factory-gate prices, or the prices Chinese manufacturers charge wholesalers for their goods, have fallen for a third consecutive year, highlighting the deepening weakness in the country's industrial economy and faltering domestic demand, Nikkei has reported.

Data from the National Bureau of Statistics showed that the Producer Price Index (PPI) dropped 2.3 per cent year-on-year in September, marking 36 straight months of deflation since October 2022. The fall reflects intense price competition across industries, a prolonged property slump, and sluggish consumer spending, despite Beijing’s repeated efforts to stabilise the economy.

Meanwhile, the Consumer Price Index (CPI), a measure of retail inflation, slipped 0.3 per cent year-on-year, dragged down by cheaper food items such as pork and vegetables.

Core CPI, which excludes food and energy, rose 1 per cent , the biggest increase in 19 months, though economists attributed the rise to temporary factors like higher gold prices and state trade-in incentives.

Beijing’s so-called “anti-involution” campaign, aimed at curbing destructive price wars in sectors like autos and solar panels, has so far had little effect.

Analysts warn that sustained deflation risks pushing China toward a Japan-style stagnation, with markets now looking to the upcoming Communist Party Fourth Plenum for fresh stimulus measures.