- Shen Jianguang, economist at Mizuho Securities Asia Ltd.
China's inflation eased more than expected in October, while producer prices extended their decline to the 44th consecutive month, pointing to persistent deflationary pressure in the world's second biggest economy. China's consumer-price index climbed 1.3% in October from a year earlier, slower than the 1.6% year-on-year rise in September and compared with the 1.4% gain expected by economists. At the same time the producer price index dropped 5.9% in the reported month from a year earlier. Lower price pressure gives the People Bank of China leeway to continue easing its monetary policy, which has so far failed to underpin a pickup in growth despite six interest rate cuts and other measures to spur lending and borrowing. More stimulus is required to ensure the Chinese government growth target of no less than 6.5% in the next five years, to help the economy focus on a consumption-led growth model.
Top officials signalled that they would not tolerate a sharp slowdown. President Xi Jinping said last week that average annual growth should be no less than 6.5% in the next five years to reach the nation's goal of doubling 2010 GDP and per capita income by 2020.
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