Chinese economy expected to have slipped into deflation as recovery falters

"But deflation can hurt economic growth, as consumers will delay purchasing products if they think they will be cheaper in future."
Not if people are already mostly only buying what they need to survive.

With all of this deflation, how is China supposed to send more balloons?

Using the word "deflation" like it's a bad thing for citizens to be able to afford the things they need to live. That's capitalist propaganda for you. We're only happy when the blessedly wealthy get to have a good life.

In an economy as tightly controlled as China, how much does deflation even matter?

Also I wonder how everywhere else having inflation will interact with this. Is China just getting affected because the rest of the world can't afford basic necessities anymore? The article kinda touches on reduced demand from countries with inflation abroad causing this, but also doesn't really explain anything other than going "lower number is uh bad"

If the deflation is just a market correction after exaggerated inflation (retailers raising their prices more than general inflation to increase their short term subs) then it's no big deal. Prolonged deflation can be bad, as that causes too much saving and not enough spending, which can really hurt the economy and people because of how it takes money out of circulation.

In an economy, the more money can circulate, the more good it can do. I use my salary to pay for for and things, that money then pays the employees of the businesses I went to, and those employees also spent that money, and so on. At each step, both participants normally get a net benefit: I can eat, and the employee can also spend the money they get from me to eat, etc. As long as the money circulates, it keeps doing good. When it stops circulating, due to being put into savings, investments or real estate, it stops doing good (or it does less good). The cycle slows down or stops.

That's why a small amount of inflation (maybe 1-2% ? Not sure what's optimal) is actually healthy, because it puts pressure on people with money to spend it before it loses its value, instead of hoarding it.

"Won't someone think of the retailers?!"

Guess which political economic form can handle price deflation gracefully (hint, it's not capitalism)

Permanently Deleted

These would be problems if China had a liberal economic model. Fortunately they have whole process workers democracy, and these things aren't really problems at all.

My last two brain cells dying after seeing half of the comments saying that deflation is actually good.

This is the best summary I could come up with:

The Chinese economy is expected to have slipped into deflation amid signs of a faltering post-pandemic recovery, according to market forecasters.

This means retailers who stocked up on goods expecting a surge in demand after pandemic restrictions were lifted are now under pressure to cut prices.

Homin Lee, senior macro strategist at Lombard Odier, predicted July’s CPI inflation report could show “outright deflation”, with prices slightly lower than a year ago.

In the UK, consumer prices were 7.9% higher than a year ago in June, as households suffered a long run of falling real incomes.

Trade data released on Tuesday showed that China’s imports and exports both fell more sharply than expected in July, adding to concerns over the world’s second-largest economy.

Jim Reid, strategist at Deutsche Bank, said the trade data highlighted that the Chinese economy is being “dragged lower by weakness in global demand and a domestic slowdown”.

I'm a bot and I'm open source!

What's up with this weird jump in cpi? And what did China do Differently to us to not have high inflation?

https://tradingeconomics.com/china/consumer-price-index-cpi

Democracy is always superior to authoritarianism, long term. Regulated capitalism is always superior to state owned and directed business.

2001