In March, for the second consecutive month, Chinese inflation was negative. At -0.1%, it is nevertheless much less in the red than the -0.7% recorded in February.
Chinese inflation has been very low for the past two years. It has not exceeded 1% since January 2023 and has been negative seven times in the last 21 months.
The weakness of domestic demand and the country's industrial overcapacity explain this situation. To sell their goods, merchants had to sell off prices.
Growth of internal consumption to avoid deflation
Aware of the problem, Beijing authorities have said boosting household consumption is the top priority for this year.
This will prevent China from falling into the deflation trap and will allow it to maintain a certain economic dynamism despite Trump's trade war, which will penalise exports.
More than ever, in the current international context, China must succeed in its economic transformation from exports to household consumption as a driver of GDP.
Even if it is a difficult step, the country has enough assets to succeed. Chinese equities can be part of any properly diversified portfolio.