Cost pressures cooled sharply in China in March with the Lunar New Year festival out of the equation.
China’s Consumer Price Index fell as food price growth eased and the base effect from the lunar new year holiday faded, while producer price growth continued to slide.
China’s official consumer price index rose 2.1% year on year in March, according to the National Bureau of Statistics.
That was below a market forecast of 2.6% and was a sizeable slowdown from 2.9% growth in February, which was the fastest rise in more than four years.
Food prices were behind much of the slowdown in March, up just 2% year on year after a jump of 3.6% February. Pork prices, which are weighted heavily in China’s CPI basket, fell 12%.
Producer price inflation slowed for the fifth consecutive month to 3.1%, down from 3.7% in February and a market estimate of 3.2%.
Price growth in raw materials slowed another half a per cent to 4.1% year on year.
Meanwhile China’s central bank governor yesterday pledged to expand foreign access to the country’s banking, securities and insurance sectors this year and open a trading link between the Shanghai and London stock exchanges.
Yi Gang, the recently-appointed governor of the People’s Bank of China, said Wednesday that by the end of June, the government will remove foreign ownership caps on Chinese banks and allow foreign securities and life insurance firms to hold majority stakes in their Chinese counterparts.
Yi said foreign ownership caps on Chinese securities and life insurers — which are currently being raised to 51% from 49% — will be totally abolished in three years time.
By the end of this year, Yi said China will launch a trading link connecting the Shanghai stock market to London’s. Talks to do that, he said, are making “good progress.”
In addition, Yi introduced several new measures. He said that by the end of June, China will expand the permitted business scope for foreign insurance agents and will quadruple the daily quota allowed for foreign investors to buy mainland-traded stocks and for Chinese investors to purchase Hong Kong-traded stocks.
His announcement came a day after President Xi Jinping pledged further opening up of China’s economy to foreign investment.
