With inflation hitting a 30-month low, China needs more decisive monetary easing and may cut interest rates further in the coming weeks, if not days, says HSBC.
However, China will have to stomach higher structural inflation in the next few years as the nation gets wealthier and wages increase at a double-digit rate, the brokerage firm argues.
The People's Bank of China has increased renminbi circulation by 80% in the past five years, but demand for wallet-ready bills grew by 20% each year, the bank said.