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Chinese economy expected to have slipped into deflation as recovery falters
(www.theguardian.com)
this post was submitted on 08 Aug 2023
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Using the word "deflation" like it's a bad thing for citizens to be able to afford the things they need to live. That's capitalist propaganda for you. We're only happy when the blessedly wealthy get to have a good life.
But they won't because people are expecting prices to drop even more. Food and necessities, sure, it's kinda nice this month for that, but washing machines, a new TV? Better next month. And then the next. And then you don't have a job any more because you're working at a washing machine factory and nobody's buying them and the economy is going under.
Deflation being bad is one of those (rare) instances where mainstream economics actually is right. Of course inflation is bad, too, but there's a reason central banks tend to set targets just a percent or two into inflation: That's way better than risking deflation.
I don't know if deflation itself is that harmful or if it's just a symptom of economic troubles, i.e. lack of demand. In any case, if it persists, that's not a good outlook for the Chinese economy.
Both, it's a positive feedback loop, and in the end it doesn't really matter what started it once the economy crashes you've gone through multiple lack of demand -> prices fall -> even more lack of demand iterations.
"positive" as in engineering, not as in good