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In the News

Deflation hits the Chinese Economy

Graham Watson

14th March 2024

The news that Chinese consumer prices have fallen by 0.8%, the fastest rate in 15 years is worrying news, and implies that the economy has entered a deflationary period, with large falls in food prices to blame.

The Chinese economy has been in a deflationary lull since last summer, most clearly indicated by falling producer prices. And, as you should all know, the Chinese economy is a major influence on the global economy.

The Guardian looks here at the extent to which the Chinese authorities are going to be willing, and able, to encourage stronger growth or whether they really are serious about rebalancing the Chinese economy and prepared to tolerate slower, more normal growth, as a consequence. At the moment, it doesn't look like there's a stimulus package on the way.

Peter Hannam reflects here on the growth targets set by the Chinese Communist Party, and last year's supposed 5.2% economic growth. To many external commentators both look ambitious: the Chinese property market is struggling, there are concerns about weak levels of domestic demand and the possibility of deflation and the government has even stopped trying to measure youth unemployment.

So whither China? And with it the global economy.

An excellent look at how demographic change has altered the Chinese housing market, and the switch from state-provided housing to private sector provision.

It's a lengthy clip but gives a very good overview of the past 30 years of Chinese economic history and the centrality of the housing market to both its rise and, potentially, its ongoing fall.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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