Analysts say the surprising dip in the PPI illustrate the need for economic restructuring, and that Chinese policymakers should stick to regulatory reforms.
Vice President of China Development Bank, Cao Honghui, said, "The Producer Price Index number is surprising as this is the third time the figure has dropped below 10 percent since 1997. It shows that the long-term infrastructure investment is not powerful enough to boost growth. More money should go to new and high-tech industries for reform.
"Meanwhile, the Consumer Price Index shows the cost of land and labour will weigh more on the economy rather than new money issuance. This brings complexity for regulators as the CPI number alone is not enough to gauge whether the economy is overheated."
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