China: Consumer Prices Fall, Raising Deflation Concerns

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    The Facts

    • On Wednesday, China's National Bureau of Statistics (NBS) announced that consumer prices fell in July for the first time in more than two years, highlighting a trend of deflation that affects household wealth and makes loan repayments more difficult.

    • The NBS report shows that inflation fell 0.3% in July and comes a day after July figures showed that imports and exports fell sharply during the month. Manufacturers and retailers are now forced to cut prices to deal with a glut of supply and sluggish sales, as producer price inflation fell by 5.4%.

    The Spin

    Anti-China narrative

    China's powerhouse economy could finally be faltering, as its economic strength may be weaker than previously portrayed. After hedging their bets on a post-COVID boom that never materialized, Beijing will strain under a mountain of debt, lower demand, and a property crisis. The government has started to muzzle economists who don't toe the party line of economic success, as China attempts to maintain their façade of unmitigated growth.

    Pro-China narrative

    China continues on a trajectory of growth, as demand for services continue to rise as pandemic recovery continues apace, even amid a faltering demand for goods. The 20-point plan unveiled by the government to shore up consumer demand is a testament to China's sober-minded thinking on the economy, as economic growth continues unabated. Reports of China's economic demise are, once again, greatly exaggerated.

    Nerd narrative

    China's GDP will be $17.06T in 2023, according to the Metaculus prediction community.

    Establishment split



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