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China’s yuan fell to its lowest level in 17 years as deflationary pressures deepened and trade tensions with the U.S. escalated. The Consumer Price Index (CPI) dropped 0.1% year-over-year in March, marking the second consecutive month of decline, while monthly CPI fell by 0.4%, doubling the prior month’s 0.2% drop. More strikingly, Producer Prices plunged 2.5%, pointing to weakening demand and deteriorating factory margins. The growing threat of unsold exports due to rising U.S. tariffs is fueling fears of further price drops, increasing deflationary risk, and weighing heavily on the Chinese currency.

The Caixin Services PMI rose to 51.9 in March, surpassing expectations of 51.5 and improving from February’s 51.4, indicating steady expansion in the sector.

China's Caixin Manufacturing PMI for March rose to 51.2, exceeding both the expected 50.6 and the previous 50.8, signaling an accelerated expansion in the manufacturing sector. The data suggests improving business conditions, supported by stronger production and new orders, reflecting resilience in China’s industrial activity despite global economic uncertainties.

China’s Composite PMI rose to 51.4 in March from 51.1, indicating continued economic expansion. The Manufacturing PMI edged up to 50.5, slightly exceeding expectations of 50.4, suggesting a modest improvement in factory activity. Meanwhile, the Non-Manufacturing PMI climbed to 50.8, surpassing forecasts of 50.5, reflecting steady growth in the services and construction sectors. The data points to a stabilizing recovery in China's economy, though underlying challenges remain.

China’s year-to-date (YTD) industrial profits for February declined by 0.3%, improving from the previous -3.3% contraction, signaling a potential recovery in manufacturing profitability. The slowdown in profit contraction suggests marginal improvements in demand and cost pressures, likely supported by policy measures and a moderate economic rebound. However, external risks such as weak global demand and trade uncertainties continue to weigh on the sector, making upcoming data crucial for assessing China’s industrial resilience and broader economic trajectory.

The People’s Bank of China (PBoC) left its Loan Prime Rates (LPR) unchanged in March, with the 1-year rate holding at 3.10% and the 5-year rate at 3.60%, both in line with expectations.

This decision signals a steady approach to monetary policy despite ongoing economic challenges. The unchanged 5-year LPR, which serves as a key benchmark for mortgage rates, suggests that authorities are prioritizing financial stability over aggressive stimulus.

With inflation subdued and growth concerns persisting, markets will watch for future policy adjustments, particularly if economic conditions weaken further.

China's retail sales grew 4.0% YoY in February, slightly above the 3.8% forecast, reflecting a mild improvement in consumer spending. However, year-to-date retail sales rose only 2.98%, lagging behind the previous 3.48%, indicating lingering weakness in domestic demand despite government stimulus efforts.

China's Fixed Asset Investment grew 4.1% YoY, surpassing the expected 3.2%, indicating stronger capital spending. Industrial Production rose 5.9% YoY, slightly above forecasts but down from the previous 6.2%, suggesting a slowdown in factory activity. The year-to-date industrial output came in at 5.9% YoY, showing resilience despite economic headwinds. additionaly, the unemployment rate increased to 5.4%, above the expected 5.1%, highlighting persistent labor market challenges.

China's inflation weakened further in February, with CPI YoY dropping 0.7% (vs. -0.4% expected) after 0.5% growth in January. CPI MoM fell 0.2%, contrasting with 0.7% growth in January and a -0.1% expected decline. Additionally, PPI YoY dropped 2.2%, highlighting persistent deflationary pressures despite government stimulus. The data signals weak consumer demand and falling factory prices, increasing expectations for further policy support from Beijing.

China’s Trade Balance rose to CNY 1,226.06B, surpassing the expected CNY 990.00B and the previous CNY 752.91B, while in U.S. dollar terms, the surplus expanded to $170.52B, exceeding both the expected $147.50B and the previous $104.84B.

However, trade performance showed mixed results. Exports increased by 2.3% YoY, missing the expected 5.0% and sharply down from the previous 10.7%, signaling weaker global demand. Imports contracted by -8.4% YoY, significantly below the expected 1.0%, indicating weaker domestic demand. In absolute terms, Exports stood at CNY 3.40M, down from CNY 10.90M, while Imports fell sharply to -CNY 7.30M, compared to the previous CNY 1.30M.

The Caixin Services PMI for China in February 2025 rose to 51.4, up from 51.0 in January, surpassing the expected 50.8. This indicates that the services sector experienced modest expansion during the month, as any reading above 50 suggests growth in the sector.

China’s Caixin Manufacturing PMI increased to 50.8 in February (prev. 50.1, exp. 50.4), indicating a stronger expansion in the sector as output and new orders improved.