China’s economy is currently facing a major challenge – deflation. While many may think that deflation is not as serious as high inflation, experts are warning that China’s deflation could actually be more dangerous in the long run.
Deflation occurs when there is a sustained decrease in the prices of goods and services. This may seem like a good thing for consumers, as it means their money goes further. However, deflation can have serious negative consequences for an economy.
One of the main reasons why China’s deflation is more dangerous than high inflation is because it can lead to a vicious cycle of falling prices and declining demand. When prices start to fall, consumers may hold off on making purchases in the hopes that prices will drop even further. This, in turn, leads to a decrease in demand, which can further drive prices down. This cycle of falling prices and declining demand can have a detrimental impact on businesses, leading to layoffs and a slowdown in economic growth.
Another reason why deflation is dangerous is that it can increase the real burden of debt. In a deflationary environment, the value of debts remains the same while the prices of goods and services decrease. This means that borrowers will have a harder time repaying their debts, which can lead to an increase in defaults and bankruptcies.
Furthermore, deflation can also lead to a decrease in investment. When prices are falling, businesses may be less willing to invest in new projects or expand their operations, as they may not be able to recoup their investments in a deflationary environment. This can further slow down economic growth and lead to job losses.
One of the main challenges that China is facing in combatting deflation is its heavy reliance on exports. The global slowdown in demand due to the Covid-19 pandemic has led to a decrease in demand for Chinese goods, which has put downward pressure on prices. In order to combat deflation, China may need to implement expansionary monetary and fiscal policies to stimulate demand and prevent a further decrease in prices.
In conclusion, while deflation may seem harmless at first glance, it can have serious negative consequences for an economy. China’s deflation is a cause for concern, as it can lead to a vicious cycle of falling prices, declining demand, and increased debt burdens. It is important for Chinese policymakers to take proactive measures to combat deflation and prevent it from further damaging the economy.
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If you have been Saving, “Good News”.
If you are In Debt up to eyeball, “Bad news”.
China relies on globalised trade and US selfish policies have stunted global economic growth.The reason the Fed is reluctant to cut rates is that it is waiting for the US and Chinese economies to settle the score.However, the United States does not release real data, hindering the results of this battle as soon as possible.The global economy will suffer for some time yet.Unless a series of social events in the US leads the Fed to complete its rate cut as soon as possible.
This media Wall Street Journal seems to have a love hate relationship with China
There is no stops of criticism about China. China is that China is this
Going around with its reporter funded by the CIA no wonder one of your reporter is caught in Moscow
Going around the countries in the world lecturing through reports about everything that don’t conform to your Master “Rules based Orders”
Don’t you ever get tired of this works
WSJ officially thinks we're dumb
In short, someone is outcompeted and they are not happy
LIES LIES LIES LIES. CHINA IS NOT RUN LIKE THE WEST.
Items will be cheaper. Oh, no.
People use the Great Depression as the poster child for deflation, but it was the Federal Reserve, a private banking monopoly, that caused it.
Japan was able to struggle through their Great Depression because the rest of the world was growing. As many western nations populations are stagnating or falling the western reserve banks have stimulated inflation but that will eventually fail as it did in Japan. Japan has been unable to recover due to their falling population.
The world needs a balanced population with very little to no growth and recalibrated expectations regarding development.
THINGS ARE CHEAPER
china's economy will never failz… cuzz china has handz in all business ventures.
All of this is due to the ripples made in the markets where China supplies Russia with 'dual-use' products that the Russians will use for military purposes, and all the US money going to Ukraine that could of gone to China had there never been a Ukraine war in the first place. Money that Goes to Israel that could have gone to China. It's simple economics & at one point China will wise up & quit supporting Russia's war in Ukraine, because they'll better understand how it economically effects them directly.
Good for workers not for business owner