China Aug core CPI stood at 1% yoy, the 13th month of running near 1% since Aug 2025.
What were the drivers and policies?
From late 2025 to first half of 2025, trade-in subsidies boost final demand.
Anti-revolution was a focus. On July 1, 2025, Xi chaired the Central Financial and Economic Affairs Commission meeting. It explicitly called for governing disorderly low-price competition and facilitating an orderly exit of outdated capacity. Plus, the July 30 Politburo meeting went further calling to deal with disorderly competition and conduct capacity governance in key industries.
But in the second half of 2025, there was still contribution from previous metals (Jul 2025: gold and platinum jewelry contributed ~0.22ppt to headline CPI), which should be more of a one-off boost.
From Sep 2025 to 2026, China started and expanded government interest subsidy.