Corruption scandals, corporate debt defaults and growth scares have been talking points on China's economy in recent times, but there's another potential headwind that should be on the radar, says JP Morgan.
According to a recent research note from the investment bank, producer prices in have now been declining for the longest period of time since the 1997-1998 Asian financial crisis, and the trend is posing a very real threat to Beijing's broader macro-economic policy.
"Perhaps more worrying [than consumer price inflation] is the persistent PPI [producer price index] deflation, which is closely related to corporate profits and hence manufacturing investment," said Grace Ng, senior China economist at JP Morgan bank.
"As such, if PPI remains subdued… it would dim the prospects of any potential recovery in manufacturing fixed asset investment this year," she added.
While Beijing has been fairly successful in taming consumer inflation in recent years, producer prices, which fell for a 24th straight month in February, has sparked deflationary concerns.