Part 4/14:
The macroeconomic impact is profound. The International Monetary Fund (IMF) predicts zero inflation for China this year, and neighboring Korea warns that Beijing’s deflation could export downward price pressures globally. When domestic prices decline sharply, manufacturers cannot sell goods profitably within China and are compelled to offload inventories overseas at losses, fueling a global deflationary trend.
Behind the scenes, manufacturing sectors face significant stress. The GDP deflator—the broad measure of price changes—has fallen for ten consecutive quarters, indicating deep-rooted weakness. Prices for critical raw materials such as polysilicon (used in solar panels) and steel rebar have collapsed by as much as 80%, further depressing industrial activity.