China Deflation Fears Grow

Bad news stories continue in China today with reports of more capital controls, devaluation fallout, and another drop in the Producer Price Index (PPI).

Reuters reports China Deflation Fears Grow as Producer Prices Sink Most in Six Years.

 China’s manufacturers slashed prices at the fastest rate in six years in August as commodity prices fell and demand cooled, signaling stubborn deflation risks in the economy and adding to expectations for further stimulus measures.

The producer price index (PPI) fell 5.9 percent in August from the same period last year, its 42nd consecutive month of decline and the biggest drop since the depths of the global financial crisis in late 2009, data showed on Thursday.

Official and private factory surveys last week also showed manufacturers laid off workers at a faster rate last month as their order books shrank.

More Capital Controls

The Financial Times reports Beijing Clamps Down on Forex Deals to Stem Capital Flight