Deflation is a recurring problem for the Chinese economy.
While the European Union, the United States and many other countries around the world are making efforts to halt inflation, China’s economy is facing the opposite situation, namely deflation.
Consumer prices have been falling for the first time in more than two years, spending has fallen sharply among both the population and businesses, and the world’s second-largest economy is struggling to bring demand levels back up.
The growing crisis in China hit U.S. and European markets, while economists speculated about the implications for the global economy. There is also concern about growing friction between China and the West, with talks between U.S. and Chinese leaders on the subject of trade in goods becoming more tense.
While most economies have reported increases in consumption after the pandemic. High demand for goods and services coupled with limited supplies, along with the energy crisis and the war in Ukraine, have pushed up prices in most places, but this hasn’t happened in China.