China's Economic Recovery Remains Shaky Amid Deflation Concerns

China's stock market closed down on Wednesday, amid concerns of continuing deflation and weak domestic demand. Despite an increase in consumer prices, the country's economy showed signs of slowing down, prompting expectations for further government stimulus. The Shanghai Composite and Hang Seng indices both experienced declines.

China's stock market faced a downturn on Wednesday after new data indicated continued weak domestic demand and growing concerns about deflation. Despite consumer prices rising for the fifth consecutive month in June, the figures fell short of expectations.

Chief economist at Pinpoint Asset Management, Zhiwei Zhang, noted that the risk of deflation has not yet faded and that domestic demand continues to be weak. A Reuters poll revealed that China's economy likely grew 5.1% in the second quarter, slower than the first quarter, heightening expectations for more government stimulus.

The Shanghai Composite index fell 0.68% to 2,939.36, while the Hang Seng index dropped 0.29% to 17,471.67. Other indices across China and the region also saw declines, showcasing the widespread impact of these economic concerns.

(With inputs from agencies.)