China Faces Deflation, Raising Concerns for World Economy
Summary from the AllSides News Team
Falling prices, slowing GDP growth, and a host of other economic problems in China have led observers to raise concerns for the global economy.
The Details: With inflation rates dropping worldwide, consumer prices in China deflated in July as consumers and businesses spent less. Additionally, China’s GDP growth in the second quarter of 2023 was 6.3%, lower than the expected 7%. The country’s unemployment rate for ages 16–24 hit a record 21.3% in June, as young people throughout Asia spurn low-wage factory jobs. Furthermore, local government debt and a struggling real estate market have added to the economic uncertainty.
Global Implications: China’s economy has reportedly been bad for Western businesses; along with struggles to find labor, stricter enforcement of data and spying laws has reportedly scared some foreign companies. The news also comes amid a geopolitical struggle over semiconductors and other technologies; this week, U.S. President Joe Biden is expected to sign an executive order restricting some U.S. technology investments in China.
How the Media Covered It: Coverage appeared to be less common among right-rated outlets, which instead focused on stories framing China as opposed to the U.S. Coverage in business and global outlets, generally rated Center or Lean Left, were most likely to cover China’s deflation. Descriptions of China's troubles varied; while The Wall Street Journal (Center bias) warned of “a potentially dangerous” new economic phase, The Guardian (Lean Left bias) said, “fears of sustained deflation are premature.”
Featured Coverage of this Story
From the Left
China’s Economy Faces Yet Another Threat: Falling Prices
The United States has spent much of the past 18 months struggling to control inflation. China is experiencing the opposite problem: People and businesses are not spending, pushing the economy to the verge of a pernicious condition called deflation.
Consumer prices in China, after barely rising for the past several months, fell in July for the first time in more than two years, the country’s National Bureau of Statistics announced on Wednesday. For 10 straight months, the wholesale prices generally paid by businesses to factories and other producers have been down...
From the Center
Deflation: Why falling prices in China raise concerns
China's economy has slipped into deflation as consumer prices declined in July for the first time in more than two years.
The official consumer price index, a measure of inflation, fell by 0.3% last month from a year earlier.
Analysts said this increases pressure on the government to revive demand in the world's second largest economy.
This follows weak import and export data, which raised questions about the pace of China's post-pandemic recovery.
The country is also tackling ballooning local government debt and challenges in the housing market. Youth unemployment,...
From the Right
China exports plummet to lowest point since start of COVID pandemic as US firms turn away from rival amid tensions
China’s exports plummeted to their lowest level since the beginning of the pandemic as Western demand tails off, battering the world’s second-largest economy.
Chinese shipments fell by 14.5% in July compared to the same month last year and imports dropped by 12.4% as the ruling Communist Party struggles to dig out of its post-COVID funk, according to data released by Beijing on Tuesday.
The sagging figures dovetail with US Commerce Department data which show that American imports from China fell by 25% during the first half of this year.
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