Low demand in China has resulted in a drop in producer pricing and a slowing in consumer price inflation.

As consumer inflation eased in November, factory-gate prices in China continued their two-month annual decline, reflecting sluggish activity and demand in an economy that has been restrained by strict financial controls.

The government, according to analysts, should maintain low interest rates and take steps to encourage confidence.

Based on statistics released by the National Bureau of Statistics on Friday, the producer pricing index (PPI) was down 1.3% from a year earlier, which is the same annual shrinkage witnessed in October. That was much less rapid than the predicted drop of 1.4% in a Reuters survey.

After a 2.1% annual increase in October, the consumer price index (CPI) in November grew by only 1.6%, the weakest rate in eight months and in line with a Reuters poll's forecast.

According to Pinpoint Asset Management's senior economist, "these figures show the economic momentum (continues) to decline."

On Tuesday, the ruling Communist Party's Politburo held a high-level political meeting where they reaffirmed their commitment to focusing on growth stabilization, internal demand development, and international engagement in 2023.

According to Zhang, the government would take additional efforts to stimulate the economy, despite having loosened pandemic controls over the last week.

Confidence was a big issue for the economy, he said, citing a recent Politburo meeting. The rapid pace of reopening shows the government's urgency, so I anticipate more action to bolster market and household confidence.

The unyielding COVID-19 restrictions have had a major influence on growth in the world's second-largest economy this year, which has coincided with a general softening of demand around the world.