China’s Provinces Set Realistic Inflation Goals as Consumer Demand Remains Weak
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After two years of near-zero inflation, most Chinese provinces have set their 2025 Consumer Price Index (CPI) growth target at around 2%, signaling a shift toward more realistic economic goals amid weak consumer demand and persistent deflation risks.
As of January 20, 2025, some 30 provincial governments had announced CPI targets in their annual work reports. Yunnan was the only exception. Xizang maintained its previous cap of under 3%, Hunan aligned with the national target and Shandong aimed for “reasonable price levels.” The remaining 27 provinces lowered their targets to approximately 2%, a notable departure from the long-standing 3% benchmark.
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- Most Chinese provinces set 2025 CPI growth targets at around 2% due to weak demand and deflation risks, with 27 provinces lowering targets from a longstanding 3% to 2%.
- Economists and policymakers suggest a 2% CPI target is more achievable, aligning with potential national CPI adjustments expected in March 2025.
- China aims to counter deflation through demand revival and price recovery, with initiatives like 810 billion yuan subsidies to spur economic activity and income growth aligning with GDP growth targets.
- China International Capital Corp
- China International Capital Corp. described a 2% CPI target as more achievable for China in 2025, given the current economic conditions. The organization supports the idea of a lower target to address inflation and demand shortfalls, aligning with the central government's focus on a “reasonable price recovery.”
- 2023：
- CPI growth was recorded at 0.2%.
- 2024：
- CPI growth was again recorded at 0.2%, and discussions hinted at lowering the CPI target.
- 2024 Central Economic Work Conference：
- Policymakers emphasized stabilizing growth, employment, and price recovery with a focus on addressing weak demand and encouraging domestic consumption.
- Late 2024：
- Discussions among policymakers suggested revising the CPI target downward.
- January 20, 2025：
- As of this date, 30 provincial governments in China had announced their CPI targets for 2025.
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