Investors expect price pressures to become entrenched in world’s second-largest economy
China’s government bond market has opened 2025 with a clear warning for policymakers: without more determined stimulus, investors expect deflationary pressures to become even more entrenched in the world’s second-largest economy. China’s 10-year bond yield, a benchmark for economic growth and inflation expectations, fell to a record low of less than 1.6 per cent during trading last week and has since hovered close to that level.
Growth in China was estimated to be 5 per cent last year. More insidious than the slower growth, however, are the deflationary pressures in China’s economy, said analysts. The Citi economists noted that the final quarter of last year was expected to be the seventh in a row in which the GDP deflator, a broad measure of price changes, was negative.
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