Economic & Finance

China Battle Against Deflation: Urgent Actions Needed for Economic Revival

china economy deflation

The China is experiencing deflation for the first time in almost two years, yet another sign that Beijing might need to introduce stimulus measures to revive its stuttering economy.

According to data from the National Bureau of Statistics, the consumer price index (CPI), which measures the cost of an average shopping basket, fell 0.3% in July.

According to the government agency, factory gate prices plunged 4.4% year-on-year last month, their tenth consecutive decline.

Since December 2020, both indices have fallen in tandem for the first time since February 2021.

According to the latest figures, China is experiencing deflation, or when prices start to fall rather than rise like they are in the US.

Beijing is also grappling with faltering growth, skyrocketing youth unemployment, and massive debt.

Steve Clayton, Hargreaves Lansdown’s head of equity funds, said that the actual cost of goods has fallen both in stores and at factory gates. “This is indicative of a slowdown in the Chinese economy, which is heavily indebted.”.

Analysts expect more calls for fiscal stimulus after Wednesday’s data.

Despite promises to boost the economy “with precision and force” last month, policymakers have yet to implement so-called “big bang” measures.

According to Deutsche Bank research strategist Jim Reid, the CPI and PPI are both falling simultaneously for the first time since 2020, which confirms an economic deflation.

Also Read:

Editorial Director
I'm Shruti Mishra, Editorial Director @Newsblare Media, growing up in the bustling city of New Delhi, I was always fascinated by the power of words. This love for words and storytelling led me to pursue a career in journalism. In this position, I oversee the editorial team and plan out content strategies for our digital news platform. I am constantly seeking new ways to engage readers with thought-provoking and impactful stories.


Leave a Reply

Your email address will not be published. Required fields are marked *