China's Economy Slips into Deflation, Officials Fear Xi Jinping's Wrath | Vantage with Palki Sharma

foreign economy is making headlines every day yesterday we told you about the falling exports today there is more bad news from China the Chinese economy has slipped into deflation what does that mean prices of consumer goods have fallen everything is getting cheaper it may sound like good news but it's not deflation is the opposite of inflation and it translates into no economic growth in other words China's economy has tanked the world is talking about it but the people of China are not they're very officials are resorting to self-censorship they're refusing meetings and watching their backs they're afraid of inviting XI jinping's Roth we'll tell you all about it but first the numbers consumer prices have fallen in China it's the first such fall in three years last month's Consumer Price Index is out it fell by 0.3 percent year-on-year meaning it's 0.3 percent lesser than this time last year in the month of June there was no change prices did not move in the month of July we have seen a fall now what is the Consumer Price Index it is a measure of inflation it tells us how consumer goods are priced and what kind of goods are these the kind that we buy or use every day stuff like food clothing transportation their prices are falling in China and that's bad news for the Chinese economy when an economy deflates everyone suffers the consequences prices fall because people are buying less and you know what happens when demand Falls it impacts production factories make fewer Goods this has a trickle-down effect on jobs low demand and low business leads to layoffs over a longer period of time it hits investments in businesses it leads to losses and the Chinese economy is going down that road what about the rest of the world they won't be immune to what happens in China beijing's economic decline will affect everyone because China is a major economy it is a major importer too it's the world's largest Marketplace for energy for raw materials and for food deflation in China will mean a drop in all these orders the Chinese will import less so countries that depend on China for business will feel the impact they'll have to look for other buyers and here's something else you should know this did not happen out of the blue China's deflation has been in the making for a while now at the beginning of this year they set a Target China wanted to keep inflation at three percent but it has failed inflation has fallen into negative territory the Government tried giving some stimulus they also slashed interest rates they offered tax incentives to businesses but there was no major relief package experts have repeatedly called for such a package but Beijing has refused to go around that path and that's problematic because China's economy is seriously sick it is like a patient who needs surgery but Beijing is only offering it Band-Aid it won't work so the question is why are Chinese officials hesitating it's hard to say because they're not talking they seem to have gone incommunicado investors Bankers business owners economists they've all tried to reach these officials and these are people who regularly visit China they hold frequent interactions with technocrats but in recent weeks they haven't been able to get in touch Reports say invitations for coffee or dinner are being declined if they do get a chance to meet there is no Frank exchange of opinions officials stick to templated talking points again the question is why and the answer is this Chinese officials are under scrutiny there is now a new anti-espionage law in China it came into force in the month of June its Provisions are vague by Design and the punishment is Harsh like life imprisonment even execution in extreme cases and this new law has sent Chinese technocrats into a shell they won't speak Beijing is going to great lens to protect information this year China also rolled out an app it is used to train government workers on how to keep a secret all officials have to take this training they have to spend four hours on the app they also have assignments essays tests there was a time when China's technocrats were celebrated China had a reputation of running a professional bureaucracy but today they're being treated like school kids they've been made to take tests and all of this as consequences and they're showing foreign direct investment has fallen to a 25-year low foreign funds are not investing in Chinese stocks the market is too unpredictable China has lost growth momentum more importantly China has lost the trust of the world

Channel: Firstpost

Views: 94,953

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Id: G-GuAerYYPg

Length: 5min 19sec (319 seconds)

Published: Wed Aug 09 2023