China's Inflation Data and Economic Forecasts Raise Concerns

China's consumer inflation reached a near two-year high, rising 0.7% year-on-year in November, the highest level since February 2023, according to the National Bureau of Statistics. This increase followed a 0.2% rise in October and matched economists' expectations.

However, producer price deflation deepened, with factory-gate prices falling 2.2% year-on-year, extending a deflationary trend into its fourth year. This decline missed forecasts and suggests persistent challenges in reviving domestic demand amidst ongoing trade tensions.

Meanwhile, core inflation remained stable at 1.2%, supported by higher food prices but underpinned by concerns over deflationary pressures in the economy. The International Monetary Fund has revised China's growth forecast upward to 5% for 2025, attributing this to stimulus measures and a more resilient outlook despite ongoing economic challenges.

However, the IMF also warned of significant imbalances, weak domestic demand, and the need for a shift towards a consumption-driven growth model. As these economic indicators emerge, Asian markets exhibited mixed responses, with Hong Kong's Hang Seng index slightly up, while mainland China's CSI 300 closed marginally lower, reflecting the market's cautious stance amid these developments.