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China’s Factories Losing Pricing Power in Earnings Threat

Chinese factories are losing pricing power in the worst wholesale-cost deflation since 2009, signaling corporate earnings may deteriorate further and putting a damper on global inflation pressures.

Steelmaker China Oriental Group Co. says falling prices are wiping out profits, while Yunnan Copper Industry Co. cited the declines for a third-quarter loss. The producer-price index fell 3.6 percent in September from a year earlier and may stay negative until the second half of 2013 without large stimulus, according to Mizuho Securities Asia Ltd.