China's Deflation Worsens as Consumer Prices Hit 3-Year Low, Stocks Tumble

China's disinflationary trend worsened in November as consumer prices fell at their fastest pace in three years, while producer prices remained in contraction for the fourteenth consecutive month. The weak readings raised concerns about the Chinese economy, leading to a decline in stock markets. The decline in consumer prices and weak business activity indicate little pick-up in consumer spending, despite government liquidity injections. Chinese businesses continue to face pressure from weak overseas demand, and the readings contradict recent statements from the People's Bank of China. Moody's has warned of a potential downgrade to China's credit rating, and investors are calling for more targeted fiscal measures to support the economy.