Reuters (July 22)
“China’s hardened rhetoric against price wars among producers is raising expectations Beijing may be about to kick off industrial capacity cuts in a long-awaited, but challenging, campaign against deflation that carries risks to economic growth.” Such a campaign would “echo” similar successful “reforms a decade ago to reduce the production of steel, cement, glass and coal, which were crucial to ending a period of 54 consecutive months of falling factory gate prices.” Success may prove elusive this round. “The fight against deflation will be much more complicated and poses risks to employment and growth” while U.S. trade war ”is intensifying price wars, squeezing factory profits.”
Tags: Beijing, Cement, China, Coal, Complicated, Deflation, Economic growth, Employment, Expectations, Glass, Growth, Industrial capacity, Price wars, Producers, Rhetoric, Risks, Steel, Trade war, U.S.
Wall Street Journal (December 14)
“Falling prices in China” are causing havoc “as factories struggle to cope with overcapacity and weak demand.” This is increasing pressure “on Beijing to take more forceful action to prevent a downward spiral of deflation that becomes self-reinforcing, potentially landing China in a longer-term recession.”
Tags: China, Deflation, Downward spiral, Factories, Falling prices, Havoc, Overcapacity, Recession, Self-reinforcing, Struggle, Weak demand
Foreign Policy (March 11)
Some question China’s 5.2% GDP growth figure for the final quarter of 2023, but even assuming “the figures are accurate, the wider trends of the Chinese economy suggest a worrying state of affairs.” China’s real GDP figure exceeded its nominal figure. This “indicates that Beijing’s gross value of output in real terms was amplified thanks to negative inflation…. If not for deflation, China’s real GDP growth in 2023 would have been even lower and would have certainly missed the national target of 5 percent.”
Tags: 2023, Accurate, China, Deflation, Economy, GDP, Gross value, Growth, Negative inflation, Nominal, Output, Real GDP, Trends, Worrying
Washington Post (December 10)
“China’s consumer prices fell the fastest in three years in November while factory-gate deflation deepened, indicating rising deflationary pressures as weak domestic demand casts doubt over the economic recovery.” Year on year and month on month, CPI fell a worse than expected 0.5%. “The year-on-year CPI decline was the steepest since November 2020.”
Tags: China, CPI, Deepened, Deflation, Domestic demand, Doubt, Economic recovery, Factory-gate, Fell, November, Pressures, Steepest, Weak, Worse
South China Morning Post (May 25)
Several factors help explain “the outperformance of Japanese shares.” Improved corporate governance and the end of deflation are important, but “the explanation with the most resonance for investors is Japan’s role as a safe haven in an increasingly risky world. This has taken on added significance because of concerns about the deepening geopolitical rift between the US and China, as well as economic and regulatory risks in China itself.” Japan boasts “the only market in Asia big and liquid enough to offer an alternative to China while still providing exposure to the reopening of its economy.”
Tags: Big, China, Corporate governance, Deflation, Economic, Exposure, Factors, Geopolitical rift, Investors, Japan, Liquid, Outperformance, Regulatory risks, Reopening, Risky world, Safe haven, Shares, US
Financial Times (January 21)
“In a country where companies have resisted raising pay and the workforce has refrained from aggressive salary demands for most of the past three decades, Fast Retailing’s move is a watershed for the government and the Bank of Japan’s battle to lift the economy out of deflation.” Should the approach gain momentum, “the ramifications could be far-reaching,” potentially leading to “a virtuous cycle of rising wages, consumption and prices” that “would allow Japan to finally move away from the negative interest rates and ultra-loose monetary policies.”
Tags: BOJ, Consumption, Deflation, Demands, Economy, Fast Retailing, Interest rates, Japan, Prices, Raising pay, Rising wages, Salary, Ultra-loose, Virtuous cycle, Watershed, Workforce
The Economist (March 19)
The Economist Intelligence Unit just announced the most expensive cities in the world. Due to inflation, Tokyo doesn’t rank in the top 10. “Singapore marks its sixth straight year at the top of the rankings, and is joined there by Hong Kong and Paris.” Osaka was the only Japanese city to make the top 10 in “the survey, which compares prices across 160 products and services.”
Reuters (August 22)
Deflation “has hobbled Japan’s economy for nearly two decades, bedevilling policymakers despite drastic measures aimed at engineering a sustainable recovery.” For the sixth time, the Bank of Japan (BoJ) has delayed its 2% inflation target. This time until March 2020. Still, two-thirds of respondents in an August 1-16 Reuters Corporate Survey “saw the inflation goal as unrealistic,” with many of their responses further illustrating the complexities involved in overcoming deflation.
Tags: BOJ, Complexities, Deflation, Delay, Economy, Hobbled, Inflation, Japan, Policymakers, Recovery, Respondents, Survey, Unrealistic
South China Morning Post (June 27)
“Thanks to Brexit, a new global financial crash is looming. More vulnerable economies risk slipping back into recession and deflation will continue to get the upper hand.”
Tags: Brexit, Deflation, Financial crash, Looming, Recession, Risk, Vulnerable
Washington Post (January 14)
“The China bubble has burst,” but the nation’s trajectory remains unclear. “The worst outcome—a doomsday scenario—would have China fostering worldwide deflation. Its growth would continue to deteriorate sharply, extending the decline in commodity prices and the weakness of global trade. Around the world, there would be more production cuts, layoffs and bankruptcies.”
Tags: Bankruptcies, Bubble, Burst, China, Commodity prices, Deflation, Doomsday, Global trade, Layoffs, Outcome, Production cuts, Unclear, Worst
