Part 7/11:
Unlike inflation, which typically signals a thriving market economy, deflation creates a worrisome environment where declining prices reflect slowing demand. The paradox of deflation in China’s burgeoning economy emerges as consumer confidence wanes and spending plummets. As a consequence, businesses cut prices to attract hesitant shoppers, leading to a dangerous cycle that hampers wage growth and economic resilience.
The decline in consumerism exposes vulnerabilities in an economy heavily reliant on low-cost manufacturing, making it harder for China to compete with neighboring countries that display greater economic stability.