SCIO briefing on China's economic performance in July 2025

South China Morning Post:

You've shared your analysis on the CPI data. Could you please provide your perspective on the PPI figures and their outlook in the coming months? The Commission for Finance and Economy under the CPC Central Committee held a meeting on July 1, emphasizing the need to regulate enterprises' low-price disorderly competitions in accordance with laws and regulations. Given this, has there been any visible effect of the measures to eliminate rat race competition in the recent economic data? Thank you.

Fu Linghui:

Thank you for your questions. Recently, as the policies to expand domestic demand and spur consumption began taking effect, the building of unified domestic market advanced. Our regulation of enterprises' low-price, disorderly competition in accordance with laws and regulations has improved the supply and demand dynamics of certain markets. This has led to some positive changes in prices. The CPI rose 0.4% month on month in July, reversing the 0.1% decline seen in June. Notably, the price of industrial consumer goods increased by 0.5% from the previous month, with the growth rate accelerating by 0.4 percentage points. In July, prices of fuel-powered and new energy vehicles shifted from a month-on-month decline to a flat trend, halting the previous consecutive downward momentum. The PPI decreased by 0.2% month on month in July, with the rate of decline narrowing by 0.2 percentage points compared to June. This marks the first time the monthly decline has slowed since March. Notably, price declines in key sectors such as coal, steel, cement, photovoltaic products and lithium battery manufacturing narrowed by 0.1 to1.9 percentage points, compared to the previous month. Such moderation in price decline across these sectors reduced their downward drag on the overall PPI by 0.14 percentage points from the level of June.

Despite the complex and volatile external environment with lingering uncertainties from international commodity price fluctuations, coupled with significant competitive pressures in certain domestic sectors, the foundation for a reasonable price recovery is being steadily enforced. This is driven by incremental macroeconomic policies that sustain efforts to boost consumer spending. It also relies on proactive regulation to curb disorderly low-price competition among firms, the promotion of capacity management in key industries, and the growing influence of new economic drivers. Thank you.