More Evidence of Destructive Deflation in China | naked capitalism
www.nakedcapitalism.com
China's deflation crunch is getting worse.
  • Soot [any]@hexbear.netEnglish
    2·
    28 days ago

    falling prices

    Oh no thonk-cri

    GDP grew by 5%, although China’s population fell even faster than forecast

    The unexpected strength of China’s exports last year made up for the weakness of other sources of spending

    manufacturers are exporting more, notching a record $1.2 trillion trade surplus in 2025

    China’s trade surplus is so large that it is already pushing the limits of what its partners can absorb

    tails-what We’re exporting so much that we’re making tons of money!!!one

    households … saved an even higher share of their income in 2025 (32%) than they had the year before (31.7%)… The average Chinese household stashes about one-third of its income, while Americans save less than 5%.

    cri Households aren’t living paycheck to paycheck? They can save ON AVERAGE A THIRD of their income!!! Proportionally 6-fold more disposable income than Americans…

    That leaves companies all along the supply chain earning less. Many feel they have no choice but to lower prices to unload inventory, eating into profits.

    powercry-2 But the profits!! How will they be sustained with low low prices!!

    When Beijing sets economic goals, provinces and municipalities compete for glory. Local governments pour money into industries, creating a flood of companies all fighting to come out on top.

    Socialism creating the conditions for actually ideal market competition? Where are the oligopolies?! We need an Elon Musk to always win and take all the government money! maddened

    many everyday Chinese get by with bare-bones [cheap] health insurance or small [private] pensions, sometimes as low as around $30 a month.

    This is meant to be an article on how BAD China is doing… thats-why-im-confused All I’m hearing is

    • Everyday stuff is getting cheaper
    • Increased exports bringing in more money
    • Households quite literally having more money than they know what to do with. But these savings are all kept in state banks, so instead it’s being spent on local government investment and local business subsidies.
    • Everyone can afford health insurance and private pensions
    • Companies feel pressured to lower prices instead of pointlessly increasing profits

    Yes, deflation can be a problem. I’m not saying it can’t go wrong, but so far the western analysis seems to be “but line not go up, SO IT CAN’T BE WORKING!!!” while it works fine.