Consumer demand slumps in China

Chinese Premier Wen Jiabao delivers his work report at the National People's Congress.
Slumping consumer demand pushed China’s consumer and producer price indices into negative territory in February, state-run media reported Tuesday.

Consumer prices fell 1.6 percent for the month, compared to a year ago, while the producer price index dropped 4.5 percent from a year earlier, Xinhua news agency reported. The numbers are indicators of inflation at the retail and wholesale levels, which means average prices are falling across China. Lower prices can be good news for consumers. But in times of recession or economic slowdown it is also a sign that demand has fallen, and producers have had to lower their prices to get their products sold. This daunting economic news comes a week after Premier Wen Jiabao pledged to steer China out of economic troubles. “The global financial crisis continues to spread and get worse,” Wen said in a speech to the National People’s Congress.

He said the country needs to boost consumer demand, increase investments, focus on scientific innovation and promote social well-being to offset the economic slump. “We are truly confident that we will overcome difficulties and challenges,” he said, adding that China will work with other countries to “curb the financial crisis.” Wen predicted China could achieve 8 percent growth in the economy, despite the pressures from the international economic downturn.