China’s PPI returned to positive growth in March, but the key issue is whether
the rise reflects Middle East supply disruptions or stronger demand from the
government’s overcapacity crackdown, says Zhiwei Zhang of Pinpoint Asset
Management.
He says the split will signal how effective policymakers have been in reducing
price competition and supporting demand. CPI data meanwhile showed an unexpected
slowdown as food inflation eased after a holiday boost.
With uncertainty still high in the Middle East, Zhang expects China’s inflation
outlook to remain unclear and Beijing to keep policy unchanged for now.
