China August Factory Deflation Deepens, Prices Fall Most in Three Years; Pork Prices Soar

Fruit and vegetables can be seen behind a man selling pork as he checks his money at a small roadside market in central Beijing, China on March 1, 2011. David Gray/Reuters

BEIJING—China’s factory-gate prices shrank at the sharpest pace in three years in August, falling deeper into deflationary territory and reinforcing the urgency for Beijing to step up economic stimulus as the trade war with the United States intensifies.

Analysts say flagging demand at home and abroad is forcing some Chinese businesses to slash prices to win new orders or cut output to contain costs, chipping away at already-lean profits and further dampening business confidence.