JPMorgan Econ FI-China April CPI inflation rate ticked up modestly to .oya PPI deflation lingered on-此為英文文檔

AsiaPacificEconomicResearch

12May2024

China

AprilCPIinflationratetickedupmodestlyto0.3%oya;

PPIdeflationlingeredon

?China’sAprilCPItickedupmodestlyto0.3%oya(or0.%m/msa).Theoverallpricingenvironmentremainsrathersoft:takingthefirstfourmonthstogether,headlineCPIinflationaveragedat0.1%oya(orrising1.5%3m/3msaarbyApril).

?FoodpriceseasedfurtherinApril,down0.2%m/msa(ordown2.7%oya),withstabilizationinporkprices(0.0%m/mnsa),declineinvegetableprices(down3.7%m/mnsa)andfruitprices(down2.0%m/mnsa).Regardingenergyprices,vehiclefuelpricesrose2.9%m/mnsainApril.

?CoreCPIremainedrathersteady,rising0.7%oya(vs.0.6%oyainMarch),orup0.1%m/msa.

?Overall,regardingmajorfactorsdrivingrecentCPItrends,foodpricesremainedsoft(thoughporkpricesbegantostabilize),energypricesturnedupalongwithglobalcommodityprices,whilevolatilityintravelandtransportcostsasholidayseasonscomeandgo.Asidefromthesefactors,generalpricingpowerseemstohaveremainedsoft,anddomesticdemandhasyettopickupmomentumonasustainedbasis.

?PPIdeflationhaslingeredon,asheadlinePPIfell2.5%oyainApril(vs.-2.8%oyainMarch),andfalling0.4%m/msa.Energy-relatedPPIcomponentsrosemoderatelyalongwithglobalenergyprices.Meanwhile,producerpricesforindustrialmaterialscameinsomewhatmixed,withdeclineinPPIforferrousmetalprocessing(includingsteel),andupturninPPIfornon-ferrousmetals(includingcopper).Auto-relatedPPIcontinuedtoease.

?Weexpectdeflationwillendbutlowinflationwillstayin2024,consideringtherecenttrendinglobalcommodityprices,asdomesticporkpricesgraduallystabilize,whileannualCPIinflationwillbesupportedbyalow-baseeffectincomingmonths.Meanwhile,demand-supplyimbalanceandexcesscapacityconcernsremainsignificant.

?Ourforecastforfull-year2024CPIinflationstandsat0.5%.TogetherwiththeprolongedPPIdeflationpressure,theGDPdeflatorwilllikelystayinnegativeterritoryatleastthroughthenexttwoquarters.

?Onmonetarypolicy,inourbaselineforecast,weexpectthenextpolicyratecuttohappenin2Q,possiblytowardsJune.Inthe1Q24monetarypolicyreport,thecentralbankhighlightedthatensuringstablepricingenvironment,andpushingformoderatepricerecovery,shouldbeimportantconsiderationsformonetarypolicy.

China’sAprilCPIcameinatouchaboveexpectations,asheadlineCPIrose0.3%oya(J.P.Morganandconsensus:0.2%),comparedto0.1%oyainMarch.Insequentialterms,headlineCPIstayedflatinAprilin%m/msaterms(vs.-0.1%m/msainMarch),orrising1.5%3m/3msaar.Besides,coreCPIroseatasteady0.7%oyainApril(vs.0.6%oyainMarch).Insequentialterms,coreCPIrose0.1%m/msainApril(or1.6%3m/3msaar).

FurtherbreakdownofAprilCPIshowsmodesteasinginfoodprices,alongwithamoderateriseinenergyprices.Inparticular,foodpricesfell2.7%oyainApril(unchangedfrom-2.7%oyainMarch),ordown0.2%m/msa(vs.-0.3%m/msa

Seepage8foranalystcertificationandimportantdisclosures.

EmergingMarketsAsia,EconomicandPolicyResearch

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isstillstrongerthandomesticdemandandconsumptionrecovery,withthedemand-supply

imbalancecontinuingtoweighoncoregeneralconsumerprices.

WemaintainourforecastthatCPIdeflationwillendin2024,butlowinflationwillcontinue

thisyear.Theendofdeflationwillbedrivenby:(1)theglobalcommoditypricetrend,asour

globalcommodityteamexpectsBrentoilpricetostabilizetowardsanaverageof$85bbl

through2H24;(2)porkpricescouldgraduallybottomout-indeedtheover-year-agochange

inporkpriceshasreturnedtopositivezoneinApril;and(3)thelow-baseeffectkickingin

(CPIinflationsoftenednotablyfrom2Q23onwards).

Ontheotherhand,thedemand-supplyimbalanceandexcesscapacityconcernsremain

notable,whiletherecentpolicyintentiontosupporttrade-inforhomeappliancesandNEVs

mayhavemodestimpactonsupportingconsumerspending.Inaddition,ashousingmarket

weaknesslingers,softnessinhousepricesandrentalcostswillcontinue-notethatresidence

costsremainaconsistentdragforservicepriceCPI(seefourthchartbelow).Meanwhile,

wagecutpressureanddeferredpaymentinsomesectors(e.g.,governmentemployeesin

someregionsandregulatoryheadwindsectors)alsoweighontheinflationdynamics.Inour

view,consumerconfidenceremainsgenerallysoftamidlingeringconcernsofjob/income

uncertainty,anddomesticdemandconditionshaveyettopickupmomentumonasustained

basis.

Overall,ourforecastforfull-year2024CPIinflationstandsat0.5%.Togetherwiththe

prolongedPPIdeflationpressure,theGDPdeflatormaystayindeflationaryterritorylonger

thanexpected.TheGDPdeflatorhasstayedinnegativeterritoryforfourconsecutive

quarters,cominginat-1.1%oyain1Q24,andwilllikelyremainindeflationzonethroughthe

nexttwoquarters.

Monetarypolicyoutlook

InthelatestPBOC1Q24monetarypolicyreport,thecentralbankreinforcedthatmonetary

policyshouldbeflexible,appropriateandeffective,withfocusonboththebondmarketand

credit/bankloanchanneltoprovideproperfundingsupportfortherealeconomy.Thecentral

bankcontinuedtostressthatTSFandmoneysupplygrowthshouldbeconsistentwith

targetedrealGDPgrowthandinflationrates.Interestingly,regardingtheinflationpicture,the

centralbankmentionedthatthecauseofthecurrentsubduedpricingenvironmentis

insufficientdemandconditionsanddemand-supplyimbalance,ratherthaninsufficient

moneysupply.Lookingahead,thereporthighlightedthatensuringstablepricing

environment,andpushingformoderatepricerecovery,shouldbeimportantconsiderations

formonetarypolicy.

Ourbaselineforecasthaspencileddownthenextpolicyratecutin2Q,possiblytowardsJune.

ThepolitburomeetinglastweekcalledforflexibleuseofinterestrateandRRRpolicy

instruments,inordertolowerthefundingcostoftherealeconomy.Thissupportsourview

offurtherratecutsandRRRcuts.However,theroomforfurtherratecutsandRRRcutsis

modestinourview,especiallyasthetimingandpaceofinterestratecutmaydependonbanks’

NIMpressure,andfinancialmarket’srecentrepricingofFedrateoutlook(alongwiththe

impactontheCNYoutlook).

Regardinglatestmacropolicydevelopments,onfiscalpolicyfront,wenotethatgovernment

bondissuancehastrackedbelowtheseasonalpatternrecently,withmutedbondissuancein

April(ourtrackingsuggests-98bnyuannetissuanceforgeneralCGB,40bnyuanforgeneral

LGBand88bnyuanforspecialLGB).Regardingliquidityoperations,wenotemajorpolicy

banksnetpaidback343.2bnyuanPSLtothePBOCinApril.Inaddition,following70bnyuan

MLFliquiditynetwithdrawalinthemiddleofthemonth,therewas400bnyuannetliquidity

withdrawalviaOMOs(link).Lookingahead,weexpectgovernmentbondissuanceto

4

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12May2024

acceleratefromMayonwards,whichwilllikelybecomplementedbythecentralbank’s

correspondingliquiditymanagementoperations.

Consumerpriceindices

percentchange

2023

Jan-24

Feb-24

Mar-24

Apr-24

HeadlineCPI

%oya0.2

-0.8

0.7

0.1

0.3

%m/m,sa

FoodCPI

-0.5

0.7

-0.1

0.0

%oya-0.3

-5.9

-0.9

-2.7

-2.7

%m/m,sa

Non-foodCPI

-1.5

1.7

-0.3

-0.2

%oya0.0

0.2

0.5

-0.5

0.3

%m/m,sa

CoreCPI

-0.1

0.3

-0.1

0.1

%oya0.0

0.3

0.5

-0.6

0.2

%m/m,sa

Core-consumergoods

-0.1

0.6

-0.3

0.1

%oya0.6

1.4

1.2

1.4

1.5

%m/m,sa

0.4

0.0

0.2

0.1

Source:NBS;J.P.Morgan

Producerprices

percentchange

2023Jan-24Feb-24Mar-24Apr-24

Producer(NBS)

%oya-3.0

-2.5

-2.7

-2.8

-2.5

%m/m,sa

Producergoods

-0.1

-0.3

-0.6

-0.4

%oya

Consumer

-3.8

goods

-3.0

-3.4

-3.5

-3.1

%oya-0.1

-1.1

-0.9

-1.0

-0.9

Source:NBS,J.P.Morgan

China:CPItrends

%oya

6

5

4

3

2

1

0

-1

CoreCPI

HeadlineCPI

12131415161718192021222324

Source:NBS,J.P.Morgan

5

110

Healthcareand

medicines

Transportation

and

communication

105

100

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China:PPIandexportprices

%oya

Export

prices

20

15

10

5

0

-5

-10

-15

(inUSDterms)

PPI

15161718192021222324

Source:NBS,ChinaCustoms,J.P.Morgan

China:CPI-porkprices

Index,1Q18=100

%oya

250

220

190

160

130

100

70

Porkprices-%oyachange

Porkprices-level

150

120

90

60

30

0

-30

-60

2018201920202021

Source:NBS,J.P.Morgan

China:Majorservice-relatedCPIitems

202220232024

Recreation,

educationand

Index,4Q19=100,sa

culturalservices

Residence

95

201920202021202220232024

Source:NBS,J.P.Morgan

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12May2024

China:HeadlineCPI,foodandnonfoodCPI

FoodCPI

%oya,bothscales

8

HeadlineCPI

6

NonfoodCPI

4

2

0

-2

101112131415161718192021222324

Source:NBS,J.P.Morgan

China'sinflationdynamics

%oya

14

12

10

PPI

CPI

8

6

4

2

0

-2

-4

-6

201620172018201920202021202220232024

Source:NBS,J.P.Morgan

China:PPIvs.globalcommoditypriceindex

ChinaPPI

%oya,bothscales

70

J.P.Morgancommoditypriceindex

50

30

10

-10

-30

-50

0809101112131415161718192021222324

Source:NBS,J.P.Morgan

24

18

12

6

0

-6

15

12

9

6

3

0

-3

-6

-9

7

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12May2024

ChinaPPIbreakdown

%oya

60

40

PPI

metal

-Ferrous

processing

PPI-Nonferrousmetalprocessing

PPI-

PPI-Petrol,

coalandother

fuelprocessing

consumer

goods

20

0

-20

-40

1415161718192021222324

Source:NBS,J.P.Morgan

8

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ji.yan@

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12May2024

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Marketweight(overthenextthreemonths,therecommendedriskpositionisexpectedtoperforminlinewiththerelevantindex,sector,or

benchmarkcreditreturns);andUnderweight(overthenextthreemonths,therecommendedriskpositionisexpectedtounderperformthe

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Recommendationswillbeattheissuerlevel,andanissuerrecommendationappliestoalloftheindex-eligiblebondsatthesamelevelfortheissuer.Whenwechangetheissuer-levelrating,wearechangingtheratingforalloftheissuescovered,unlessotherwisespecified.Ratingsforquasi-sovereignissuersintheEMBIGmaydifferfromtheratingsprovidedinEMcorporatecoverage.

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threemonths.Ourviewofanissuer’sfundamentalsincludesouropinionofwhethertheissuerisbecomingmoreorlessabletoserviceitsdebtobligationswhentheybecomedueandpayable,aswellaswhetheritswillingnesstoservicedebtobligationsisincreasingordecreasing.

J.P.MorganEmergingMarketsSovereignResearchRatingsDistribution,asofApril6,2024

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**Percentageofsubjectissuerswithineachofthe"Overweight,"Marketweight"and"Underweight"categoriesforwhichJ.P.Morganhasprovidedinvestmentbankingserviceswithintheprevious12months.

ForpurposesofFINRAratingsdistributionrulesonly,ourOverweightratingfallsintoabuyratingcategory;ourMarketweightrating

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BaFin,theGermanCentralBank(DeutscheBundesbank)andtheEuropeanCentralBank(ECB).JPMSEisacompanyheadquarteredin

FrankfurtwithregisteredaddressatTaunusTurm,Taunustor1,FrankfurtamMain,60310,Germany.Thematerialhasbeendistributedinthe

EEAtopersonsregardedasprofessionalinvestors(orequivalent)pursuanttoArt.4para.1no.10andAnnexIIofMiFIDIIanditsrespectiveimplementationintheirhomejurisdictions(“EEAprofessionalinvestors”).ThismaterialmustnotbeactedonorreliedonbypersonswhoarenotEEAprofessionalinvestors.AnyinvestmentorinvestmentactivitytowhichthismaterialrelatesisonlyavailabletoEEArelevantpersons

andwillbeengagedinonlywithEEArelevantpersons.HongKong:J.P.MorganSecurities(AsiaPacific)Limited(CEnumberAAJ321)is

regulatedbytheHongKongMonetaryAuthorityandtheSecuritiesandFuturesCommissioninHongKong,andJ.P.MorganBroking(Hong

Kong)Limited(