Inflation & Prices
China Deflation Threat Grows as Companies Cut Prices to Survive
- Data this week likely to show consumer prices fell in July
- Deflation has become politically sensitive topic in China
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When China abandoned pandemic restrictions after three years of stringent controls, Nie Xingquan was expecting booming sales for his hand-made leather shoes. Instead, demand has been so poor that he’s had to cut prices 3% from a year ago and reduce his profits.
It’s an ominous sign of the deflationary pressure that’s hitting Chinese businesses as the economy weakens, and threatening to undermine Beijing’s stimulus plans if consumers opt to defer spending.