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China’s prices fall at fastest rate in 15 years as economy battles deflation

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China’s prices fall at fastest rate in 15 years as economy battles deflation

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China’s consumer prices fell at the fastest rate in 15 years in January, missing analysts’ forecasts and underlining the challenges for policymakers trying to revive investor confidence in the world’s second-largest economy.

The country’s consumer price index fell 0.8 per cent year on year in January, according to official statistics released on Thursday, the fourth straight month of declines and the biggest contraction since 2009.

The fall, which was steeper than a 0.5 per cent drop forecast by a Reuters poll of analysts and a 0.3 per cent decline in December, comes as China’s economy contends with an extended property sector slump, a stock market meltdown and weaker export revenue.

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“A multitude of indicators are now flashing red, signalling a perilous period ahead for China’s economy and financial markets,” said Eswar Prasad, professor of economics at Cornell University and former head of the IMF’s China division.

The CPI rose 0.3 per cent on a monthly basis, falling short of a 0.4 per cent rise forecast by the Reuters poll but stronger than a gain of 0.1 per cent in December.

The producer price index improved marginally, dropping 2.5 per cent year on year in January, a slight improvement from a 2.7 per cent decline in December and an analyst forecast of 2.6 per cent.

China’s economy slipped into deflation in July, and prices have been flat or fallen in every month since except August, leading economists to warn that prolonged deflation could undermine business and consumer confidence.

The deflationary pressures are weighing on corporate earnings and fuelling a stock market rout, analysts said. China on Wednesday sacked the head of its market watchdog, Yi Huiman, a move that analysts said was intended to placate investors angry over huge equities losses.

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“China’s persistent deflation and struggling stock markets indicate that household demand and private sector confidence remain weak, posing significant risks to the economy’s growth prospects,” said Prasad. “As deflation becomes entrenched in China, an increasingly heavy policy lift will be needed to rebuild confidence and pull the economy out of the morass.”

The National Bureau of Statistics said the consumer inflation figure was affected by the timing of the lunar new year holiday, which boosted spending in January last year but which this year falls in February.

ING chief economist for greater China Lynn Song said this exaggerated the decline in last month’s CPI figure, adding that the impact of pork prices, which have been driving deflation, should moderate in February. Increased consumer spending during this year’s festival should help push price growth into positive territory this month, he said.

The statistics bureau said while food prices dropped 5.9 per cent last month, non-food prices increased 0.4 per cent year on year.

Producer prices in January were “affected by fluctuations in international commodity prices”, the bureau added. China’s PPI has been in decline for 16 consecutive months.

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Economists are beginning to look towards the annual “two sessions” of China’s rubber-stamp parliament and its main advisory committee in March, when President Xi Jinping’s government is expected to lay out priorities for the year.

Economic growth last year slightly exceeded the government target of 5.2 per cent. But to reach that level, policymakers were forced to roll out a range of measures to address the property slowdown and a less robust than expected recovery in consumption from the coronavirus pandemic.

Officials are expected to set a gross domestic product growth target of about 5 per cent in 2024 next month, similar to the 2023 goal, which was the lowest in decades.

Beijing’s piecemeal stimulus measures include loosening critical lending rates and targeting strategic sectors with credit, along with selective efforts to support the property sector, which typically accounts for more than a quarter of economic activity.

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Trump claims US stockpiles mean wars can be fought ‘forever’; Kristi Noem testifies before Congress – US politics live

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Trump claims US stockpiles mean wars can be fought ‘forever’; Kristi Noem testifies before Congress – US politics live

Trump says US stockpiles mean “wars can be fought ‘forever’”

In a late night post on Truth Social, Donald Trump said that the US munitions stockpiles “at the medium and upper medium grade, never been higher or better”.

He added that the US has a “virtually unlimited supply of these weapons”, meaning that “wars can be fought ‘forever’”.

This comes after Trump said that the US-Israel war on Iran could go beyond the four-five weeks that the administration initially predicted. The president also did not rule out the possibility of US boots on the ground in Iran during an interview with the New York Post on Monday.

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“I rebuilt the military in my first term, and continue to do so. The United States is stocked, and ready to WIN, BIG!!!,” he wrote.

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Key events

During his opening remarks, Senate judicicary committee chairman, Chuck Grassley, blamed Democrats for the ongoing shutdown Department of Homeland Security (DHS) but highlighted four agencies: the Secret Service, Federal Emergency Management Agency (FEMA), the Transportation Security Administration (TSA), and the Coast Guard.

Democrats are demanding tighter guardrails for federal immigration enforcement, but a sweeping tax bill signed into law last year conferred $75bn for Immigration and Customs Enforcement (ICE), which means the agency is still functional amid the wider department shuttering.

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Supreme Court blocks redrawing of New York congressional map, dealing a win for GOP

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Supreme Court blocks redrawing of New York congressional map, dealing a win for GOP

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Win McNamee/Getty Images

The Supreme Court on Monday intervened in New York’s redistricting process, blocking a lower court decision that would likely have flipped a Republican congressional district into a Democratic district.    
  
At issue is the midterm redrawing of New York’s 11th congressional district, including Staten Island and a small part of Brooklyn. The district is currently held by a Republican, but on Jan. 21, a state Supreme Court judge ruled that the current district dilutes the power of Black and Latino voters in violation of the state constitution.  
  
GOP Rep. Nicole Malliotakis, who represents the district, and the Republican co-chair of the state Board of Elections promptly appealed to the U.S. Supreme Court, asking the justices to block the redrawing as an unconstitutional “racial gerrymander.” New York’s congressional election cycle was set to officially begin Feb. 24, the opening day for candidates to seek placement on the ballot.  
  
As in this year’s prior mid-decade redistricting fights — in Texas and California — the Trump administration backed the Republicans.   
 
Voters and the State of New York contended it’s too soon for the Supreme Court to wade into this dispute. New York’s highest state court has not issued a final judgment, so the voters asserted that if the Supreme Court grants relief now “future stay applicants will see little purpose in waiting for state court rulings before coming to this Court” and “be rewarded for such gamesmanship.” The state argues this is an issue for “New York courts, not federal courts” to resolve, and there is sufficient time for the dispute to be resolved on the merits. 
  
The court majority explained the decision to intervene in 101 words, which the three dissenting liberal justices  summarized as “Rules for thee, but not for me.” 
 
The unsigned majority order does not explain the Court’s rationale. It says only how long the stay will last, until the case moves through the New York State appeals courts. If, however, the losing party petitions and the court agrees to hear the challenge, the stay extends until the final opinion is announced. 
 
Dissenting from the decision were Justices Sonia Sotomayor, Elena Kagan, and Ketanji Brown Jackson. Writing for the three, Sotomayor  said that  if nonfinal decisions of a state trial court can be brought to highest court, “then every decision from any court is now fair game.” More immediately, she noted, “By granting these applications, the Court thrusts itself into the middle of every election-law dispute around the country, even as many States redraw their congressional maps ahead of the 2026 election.” 

Monday’s Supreme Court action deviates from the court’s hands-off pattern in these mid-term redistricting fights this year. In two previous cases — from Texas and California — the court refused to intervene, allowing newly drawn maps to stay in effect.  
  
Requests for Supreme Court intervention on redistricting issues has been a recurring theme this term, a trend that is likely to grow.  Earlier last month  the high court allowed California to use a voter-approved, Democratic-friendly map.  California’s redistricting came in response to a GOP-friendly redistricting plan in Texas that the Supreme Court also permitted to move forward. These redistricting efforts are expected to offset one another.     
   
But the high court itself has yet to rule on a challenge to Louisiana’s voting map, which was drawn by the state legislature after the decennial census in order to create a second majority-Black district.  Since the drawing of that second majority-black district, the state has backed away from that map, hoping to return to a plan that provides for only one majority-minority district.    
     
The Supreme Court’s consideration of the Louisiana case has stretched across two terms. The justices failed to resolve the case last term and chose to order a second round of arguments this term adding a new question: Does the state’s intentional creation of a second majority-minority district violate the constitution’s Fourteenth and Fifteenth Amendments’ guarantee of the right to vote and the authority of Congress to enforce that mandate?    
Following the addition of the new question, the state of Louisiana flipped positions to oppose the map it had just drawn and defended in court. Whether the Supreme Court follows suit remains to be seen. But the tone of the October argument suggested that the court’s conservative supermajority is likely to continue undercutting the 1965 Voting Rights Act.   

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Map: Earthquake Shakes Central California

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Map: Earthquake Shakes Central California

Note: Map shows the area with a shake intensity of 3 or greater, which U.S.G.S. defines as “weak,” though the earthquake may be felt outside the areas shown.  All times on the map are Pacific time. The New York Times

A minor earthquake with a preliminary magnitude of 3.5 struck in Central California on Monday, according to the United States Geological Survey.

The temblor happened at 7:17 a.m. Pacific time about 6 miles northwest of Pinnacles, Calif., data from the agency shows.

As seismologists review available data, they may revise the earthquake’s reported magnitude. Additional information collected about the earthquake may also prompt U.S.G.S. scientists to update the shake-severity map.

Source: United States Geological Survey | Notes: Shaking categories are based on the Modified Mercalli Intensity scale. When aftershock data is available, the corresponding maps and charts include earthquakes within 100 miles and seven days of the initial quake. All times above are Pacific time. Shake data is as of Monday, March 2 at 10:20 a.m. Eastern. Aftershocks data is as of Monday, March 2 at 11:18 a.m. Eastern.

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