Charting China’s Battle With Deflation

China’s Inflation Figures: Evaluating the Implications for the Economy

China is set to release its latest inflation figures on Thursday, providing insight into the country’s battle with deflation and its impact on the global economy. With the Chinese New Year holiday approaching, the relief rally in Chinese stocks continues, but concerns remain about the economy’s ability to escape deflation. While month-over-month prices rose at the fastest pace in a year, year-on-year consumer price deflation is expected to have intensified in January, indicating mixed signals. The country’s struggle with deflation reflects the broader challenges faced by the Chinese economy, including the pandemic recovery, a collapsing property sector, high levels of debt and leverage, and slumping asset markets.