The Iran conflict could potentially shift China's deflation into 'bad inflation', according to analysts from Gavekal Dragonomics and Soochow Securities. This could squeeze the world's largest manufacturing base, which employs hundreds of millions, and potentially increase producer price inflation by 0.4 percentage point. Brent oil prices have risen by 45% since the U.S.-Israeli strikes on Iran began on February 28, putting factory-gate prices on track to turn positive as early as March for the first time in over three years, unless the conflict ends and a recovery in energy supply. The cost-push inflation is not what we want to see, as it can squeeze corporate profits. However, China still needs a strong global economy to maintain its 4.5%–5% growth target without resorting to unplanned stimulus.