In July, China's inflation plummeted to a 30-month low, giving the central bank more room to push stimulus measures to breathe new life into the economy. The price level increased by 1,8% compared to July 2011. Less than the +2,2% recorded in June and the +3% in May. In the first seven months of the year, China's inflation rose 3,1% year on year. According to the International Monetary Fund, the drop in inflation should remain between 3 and 3,5% this year and drop by 2,5-3% in 2013.
China grew at its lowest level in three years in the second quarter, for this reason it has tried to increase domestic consumption and compensate for the weak demand for its exports abroad. Between April and June, the Chinese GDP grew by 7,6%, down compared to +8,1% in the first three months of 2012. Meanwhile, negative signals are coming from industry, with production which in July recorded an annual increase of 9,2%, below estimates (+9,8 .XNUMX%). Again, this is the weakest growth rate for more than three years.
So there are fears that the Chinese dragon will continue to slow its expansion in the coming months. Since the beginning of June, the Central Bank of China has reduced the reference rates twice, which reached 6%, as well as having increased the value of compulsory reserves for banks. All signs that Chinese leaders fear a weaker economy.
