10/03/2025

BIZ & FINANCE MONDAY | MAR 10, 2025

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China’s deflationary pressures deepen in February

Japan must fix ‘misunderstanding’ it is manipulating yen: Ex-BOJ chief TOKYO: Japan must fix “any misunderstanding”held by US President Donald Trump that its central bank was intentionally weakening the yen with monetary policy, former Bank of Japan (BOJ) governor Haruhiko Kuroda said. Trump said on Monday he had told Japan and China they could not continue to reduce the value of their currencies, as doing so would be unfair to the United States. Asked about Trump’s comment, Kuroda told a Japanese television interviewer there were limits to what Japan could do to prop up the yen if the dollar were to rise on prospects of higher US inflation from Trump’s planned tariffs. “In fact, the Japanese government has been making huge efforts to prevent the yen from weakening” such as by intervening in the exchange-rate market to support its currency, he said. After a prolonged period of ultra-easy policy, the BOJ has begun raising interest rates, while the government made rare currency market interventions in 2022 and last year to boost the yen, which in July hit a 38-year low near 162 to the dollar. The dollar ended this week around 148 yen. “The BOJ is not intentionally guiding the yen lower with monetary policy. If there’s any misunderstanding on that point, it needs to be addressed,” Kuroda said. While he has spoken in several seminars, it was the first time Kuroda appeared on television since retiring as BOJ head. The central bank is unwinding the radical monetary easing that Kuroda engineered during his 2013-2023 tenure to break Japan free from decades of deflation and sputtering growth. – Reuters Beijing to slap fresh tariffs on Canadian farm, food products BEIJING: China said on Saturday it would slap tariffs on Canadian products including rapeseed oil and pork, after a Beijing probe into levies imposed by Ottawa on Chinese goods last year. Beijing’s Commerce Ministry said it would hit imported rapeseed oil, oil cakes, and peas from Canada with a 100% tariff. Aquatic products and pork will face a 25% levy. The measures will come into effect on March 20, Beijing said. Ottawa last August placed 100% tariffs on Chinese electric vehicle imports, matching US measures seeking to fend off a flood of Chinese state subsidised cars into North America. It also announced a surtax on imports of steel and aluminum products from China. Beijing’s Commerce Ministry said a probe into those measures found that Canadian policies “disrupted the normal trade order and harmed the legitimate rights and interests of Chinese enterprises”. “China urges Canada to immediately correct its bad practices,” a ministry spokesperson said. Canada is among the world’s top producers of canola – an oilseed crop that is used to make cooking oil, animal feed and biodiesel fuel. – AFP

be loosened further with interest rate and reserve requirement ratio cuts, as indicated by the government work report.” Core CPI, excluding volatile food and fuel prices, fell 0.1% in February, the first fall since January 2021. Food prices fell 3.3% last month, versus a 0.4% rise in January. Lunar New Year celebrations, the country’s biggest annual holiday, fell in late January compared with February last year, leading to higher food prices and tourist-related services prices in January. NBS statistician Dong Lijuan said in a note yesterday that the high base of last February’s CPI brought about the fall of the index last month: “If excluding the impact of the different months of the Lunar New Year, CPI rose by 0.1% year-on-year in February.” On a month-on-month basis, CPI fell 0.2%, against a 0.7% rise in January and below a predicted 0.1% drop. To revive sluggish household

demand, China has doubled its allocation to an expanded consumer subsidy program for electric vehicles, home appliances and other goods to 300 billion yuan (RM183 billion) this year. But more profound measures to address its incomplete welfare system are still some way off, leaving consumers and businesses wary of spending amid a sputtering economic rebound. The main problems lie in “weak consumption capacity and willingness”, Commerce Minister Wang Wentao said on Thursday on the sidelines of the annual parliamentary meeting. In this year’s government work report unveiled on Tuesday, consumption was mentioned 31 times, up from 21 last year, surpassing references to technology. The producer price index fell 2.2% on-year in February, easing from a 2.3% slide in January and the smallest contraction in six months, but missing the forecast 2.1% decline. – Reuters

o Core CPI falls first time year-on-year since January 2024

BEIJING: China’s consumer price index in February missed expectations and fell at the sharpest pace in 13 months, while producer price deflation persisted, as seasonal demand faded and households remained cautious about spending amid job and income worries. Beijing last week vowed greater efforts to boost consumption in the face of an escalating trade war with the US, but analysts expect deflationary pressures in the world’s second-largest economy to drag on. The government set the 2025 economic growth target at around 5%, unchanged from last year, while lowering the annual inflation target to around 2% from around 3% last year. The consumer price index (CPI) fell 0.7% last month from a year

earlier, reversing January’s 0.5% increase, data from the National Bureau of Statistics (NBS) showed yesterday. It was the first contraction in the index since January 2024, and worse than a 0.5% slide estimated by economists in a Reuters poll. “China’s economy still faces deflationary pressure. While sentiment was improved by the developments in the technology space, domestic demand remains weak,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management. As exports face risks from the trade war, fiscal policy needs to become more proactive, he said, noting that China’s property sector also continues to struggle. “Monetary policy also needs to

A man pulling a cart as he transports sacks filled with potatoes at a market in Colombo. – REUTERSPIC

IMF chief says Sri Lanka stabilised, pledges more help

COLOMBO: IMF chief Kristalina Georgieva pledged to support Sri Lanka’s economic recovery, praising the cash-strapped nation’s “remarkable turnaround” during online talks with its president. The International Monetary Fund managing director promised unspecified help to the South Asian nation during a virtual meeting with President Anura Kumara Dissanayake, his office said on Saturday. “The economy has stabilised and is now performing well,” Georgieva said during her overnight meeting with Dissanayake, according to a

video clip shared by the Sri Lankan presidency. “This is so important for people, especially for poor people. We see a remarkable turnaround from the days when it was near collapse,” she said. Sri Lanka secured a US$2.9 billion (RM12.8 billion) IMF bailout in 2023 after declaring its first sovereign default in April 2022 following an unprecedented foreign exchange shortage and an economic meltdown. Dissanayake, a self-avowed leftist, came to power in September promising to renegotiate the IMF

loan but has since continued with his predecessor’s painful and unpopular austerity measures. “Taking action domestically to strengthen the economy in this time of greater global uncertainty is even more important than it would be if we were in a sort of plain vanilla global economic situation,” said Georgieva. She added that the IMF “would be very happy and eager to back you fully in what has been a successful journey”. Dissanayake told her that he was keen to reduce the island’s debt and boost private investment.

“To achieve this, we will introduce suitable legislation, including an Investor Protection Act, and ensure a secure and favourable environment for all investors,” his office quoted him as saying. Last month, the IMF released US$334 million, the fourth installment of the four-year bailout loan, to support the reform programme. The IMF has said reforms were bearing fruit and the economic recovery has been remarkable, with Sri Lanka’s real GDP recovering “40% of its loss incurred between 2018 and 2023”. – AFP