A sharp fall in factory prices—the 14th consecutive monthly decline—signals further trouble for a Chinese economy already facing mounting debt and slowing growth, as old-line industries struggle with growing overcapacity.
Producer prices—a measure of prices of goods before they reach consumers—dropped 2.4% in April, the sharpest decline since October, paced by particularly steep falls in the metals and chemicals sectors. That could add to concerns about slowing Chinese economic growth, say economists, because falling producer prices makes it tougher for producers of industrial goods and commodities to make profits, pay off their debts and pay their suppliers on time.
Part of a big surge in Chinese lending “has been used to refinance debt or pay off interest” of companies burdened by overcapacity, said Barclay’s Capital analyst Jian Chang. “That is helping to prevent companies from going bust.”
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Bob Davis and Richard Silk, Wall Street Journal via CHINA US Focus http://feedproxy.google.com/~r/ChinaUsFocus/~3/Xpxn_DGgnvM/
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