China's premier urges tighter price oversight as deflation pressures squeeze economy

Chinese Premier Li Qiang singled out the electric-vehicle sector, urging strengthened cost oversight and price monitoring

Moreover, Beijing needs to balance the task of curbing excess supply without stalling growth or putting jobs at risk, economists say

Some industrial players have reportedly planned to cut output, but it is unly to translate into a broader supply drawback, economists say

At the same time, Vincent Thian | Afp | Getty Images Chinese Premier Li Qiang has called for tighter pricing regulation in the electric car sector during a high-level meeting Wednesday, as Beijing sought to rein in the cut-throat price wars that are fueling deflationary pressures in the economy (an important development)

In singling out the country's electric-vehicle sector, Li urged strengthened cost oversight and price monitoring (quite telling)

He also called on major automakers to make timely payments to suppliers while practicing greater self-discipline in setting prices

Furthermore, Automakers should imve their competitiveness through nological innovation and quality upgrades, Li said

The long-simmering concerns oversupply and bruising price wars have come to the fore, with Chinese policymakers taking aim at what was described as "involution" — the fierce but often destructive competition — particularly in sectors saddled with surplus capacity, such as EVs, solar panels and steel bars, given the current landscape

In a sign that the intensifying price wars have taken a toll on es, China's industrial fits plunged 9, in today's financial world

Its factory-gate ducer prices also slipped by 2

Fits for Chinese carmakers dropped 11 (something worth watching). 9% year over year in May, even as sales volume of cars in the country rose 11. 7% during the same period, according to the China Association of Automobile Manufacturers, with over half of them being new energy vehicles

The auto industry association in May called to halt the "vicious competition," which it said has bitten into es' fitability and threatened the security of the supply chain

Additionally, Sluggish consumer demand has also strained fit margins for es

Li also called for renewed efforts to boost domestic consumption, remove "unreasonable restrictions that thwart household spending" and optimize policies for a consumer goods trade-in gram

The National Statistics Bureau's deputy head Sheng Laiyun said at a press briefing Tuesday that there has been gress made in the solar panel, cement and automobile industries in easing such price cuts without government intervention

Weekly analysis and insights from Asia's largest economy in your inbox now Not cutting backEven as China shifts its policy messaging to tackle the price wars, economists pointed out that Beijing needs to balance the task of curbing excess supply without stalling growth or putting jobs at risk, especially as an intense trade war with the U, in this volatile climate

Meanwhile, Has cast doubts over external demand for its goods, in this volatile climate

Economists at Nomura Bank suggested that attempts to address the surplus capacity would involve substantial duction cuts for manufacturers that have been selling ducts at a loss (this bears monitoring)

In contrast, However, curbs on investment flowing into the industrial sectors and duction outputs would ly generate an additional drag on the economy. "duction cut inevitably comes at the cost of growth and jobs," said Neo Wang, lead China economist and strategist at Evercore ISI, suggesting Beijing is unly to meaningfully cut back capacity. "Ensuring growth and saving jobs are of higher priority to Beijing than correcting disinflation or deflation," Wang added, stressing that "the voices so far sound a slogan for a short-d campaign at best, rather than a prelude to any reform," Wang added

China reported Tuesday that its economic growth beat expectations, expanding 5. 2% in the second quarter, putting the country on track to meet its official full-year growth target of 5%

Additionally, Moreover, While some companies across various industries have reportedly planned to cut output, it may not translate into a broader supply drawback, said Tianchen Xu, senior economist at Economist Intelligence Unit

Furthermore, "There are always people who want to expand their market with low price (noteworthy indeed)

Even if a price alliance is formed, firms can still betray the alliance and undercut competitors," Xu said, in light of current trends