😱📉 China’s Economy Slippin’ – Prices Dropping Like Lava Flow!

⬇️ Pidgin | ⬇️ ⬇️ English

China, da world’s numba two big economy, stay going through choke changes, brah. Instead of da prices going up, dey stay going down! 📉🌍

USA been scratching their heads for da last 18 months trying to keep prices under control, but China get da opposite pilikia. Da peeps and businesses ova dea not spending, so da economy stay close to something mean called deflation. 🇨🇳💵

Da kine consumer prices in China been kinda steady for choke months, but in July dey wen go down for da first time in more than two years, da China’s National Bureau of Statistics wen let everybody know on one Wednesday. Businesses been paying less to da factories for 10 months straight. Even da houses and condos stay dropping in price. 🏢📊

Dass why plenty guys stay worried about deflation. Dis kine situation can make house value go down big time and even make hard for peeps to pay back their loans, kinda like what wen happen to Japan for choke years. Japan’s economy wen go sleep and no like wake up! 🇯🇵💤

Deflation stay even more mean for one country with choke debt, and guess what, China get plenty. Mo’ than da USA! 🤯💰

Inside China, da government wen tell da smart money guys fo’ no talk about deflation, and dey saying out loud dat deflation no stay any kine problem. One big kahuna from da Bureau, Fu Linghui, even wen say, “No get deflation in China, and no going have.” 🙅‍♂️🤐

But, you know, da economists stay side-eyeing and plenty worried. 😟👀

Almost eight months ago, da big boss of China, Xi Jinping, wen chill out on some of da rules ’cause of da virus and da economy started to wake up. But after one little while, da economy started to slow down again. Da guys in charge of da money stay feeling da heat, they gotta help da economy grow. 🌱🔥

One big professor, Eswar Prasad from Cornell University, wen say dat China’s economy stay facing deflation for realz. He tink da government gotta do something fast fo’ boost da economy and bring back da trust of da local peeps and businesses. 🤓📚

Dis deflation ting only make da situation more pilikia for China, especially when countries like da USA and Germany stay looking for other places to buy stuff from instead of China. Da buyers no like buy China stuff like before, and exports stay going down big time. Wang Dan, one smart kine person from Hang Seng Bank China, say da low exports stay happening ’cause peeps in rich countries no like buy, and dey also try fo’ buy from other places and no only China. 🌏🚢

Da prices of stuffs in China went down 0.3% in July. Most of the prices wen go down ’cause food, especially pork (dass one big kine grindz in China) and cars got cheaper. But some stuffs, like clothes and shoes, and even health care, went up small kine. 🥩🚗

Most scary of all, especially in one place where most peeps money stay in houses, da house prices stay going down. One research company, Beike Research Institute, wen say da price for houses in 100 cities in China wen go down by 14% from da highest point last year in August. Even rent wen go down 5%. 🏡❌

For fix deflation, da government supposed to make more money flow around by telling banks fo’ lend out more. But no too many peeps or businesses stay interested in borrowing, except da ones owned by da government. 🏦💸

Before, in 2009 and 2012, China wen dodge deflation during hard times. But now, da real estate prices wen go up choke over da years, and da country’s money, da renminbi, wen get stronger. So, last week, da officials wen tell da local governments fo’ do something fo’ make peeps spend more. But da big government guys stay thinking twice about spending more. Da economists outside of China wondering if all these moves even going make difference. 🤷‍♂️🤔

Andrew Collier from Orient Capital Research in Hong Kong wen say, “It’s like da principal telling his students fo’ do better, but not really helping dem out.” 😅🎒

Adam S. Posen from the Peterson Institute for International Economics wen say da main problem is how China wen handle da Covid. He wen call it “economic long Covid.” Da people in China lost trust ’cause of all da lockdowns and tests and all da quarantines. 😷🔒

But China’s economy been having hard time for long time now. Dey been depending mostly on selling stuff and sending ’em out of the country and holding down da pay and making it hard for da people to invest their money anywhere else but new houses and factories. 😓🏭

Now, China get too much stuffs and not enough peeps buying ’em. At da same time, less babies being born and plenty young peeps no get job. So, new houses and all da stuff inside dem, not really needed or even can afford by da peeps. 🚼❌

So, looks like China get one long road ahead, brah. Gotta see how dey going handle dis one. 🛤🤙

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NOW IN ENGLISH

China’s Economy Facing a Drop: Declining Prices are a Concern! 📉

The world’s second-largest economy, China, is currently undergoing significant economic shifts. While the U.S. has been grappling with inflation for the past 18 months, China faces the opposite challenge. Their people and businesses are refraining from spending, putting the country on the brink of deflation. 🌍💰

According to China’s National Bureau of Statistics, consumer prices, which have been relatively stagnant for several months, dropped in July. This was the first decline in over two years. Furthermore, for the past 10 consecutive months, the prices businesses typically pay to factories have been declining compared to the previous year. To add to the concern, real estate prices are also falling. 🏠📊

This trend has ignited significant worries about deflation, a condition characterized by widespread falling prices. Such a scenario can diminish household net worth and makes loan repayments extremely challenging, as witnessed in Japan for many years. In a country like China, which has a substantial debt, the situation becomes even more alarming. The country’s overall debt, in relation to its national economic output, surpasses that of the U.S. 📉🏦

Despite these concerns, the Chinese government has advised domestic economists not to discuss deflation. Publicly, they have dismissed any risks associated with it. Fu Linghui, an official from the National Bureau of Statistics, even stated there’s no deflation in China, and there won’t be any in the future. However, global economists remain skeptical. 🌏👩‍🏫

Nearly eight months ago, China’s leader, Xi Jinping, relaxed many of the stringent anti-pandemic measures that had hampered parts of the economy. Though the Chinese economy showed some vigor earlier this year, it has now started to lose momentum. The country’s economic policymakers are under increasing pressure to intervene and stimulate growth. 🇨🇳💹

Eswar Prasad, an economics professor at Cornell University, expressed that China’s economy is now directly confronting deflation. He emphasized the need for the government to take measures and, more importantly, to restore the confidence of households and businesses. 🏫📈

Adding to China’s economic woes are the geopolitical tensions, causing countries like the U.S. and Germany to seek alternative sources for manufactured goods. The reduced demand for Chinese products, evident from the decline in exports this summer, poses a significant challenge for the country. 🌐🛍

In July, consumer prices declined by 0.3% compared to the previous year. This was primarily due to falling food and car prices. Although some goods like clothing, shoes, and healthcare witnessed a minor price hike, producer prices declined by 4.4%. Additionally, in a country where a major chunk of household assets are in real estate, the falling housing prices are particularly distressing. 🚗🥼

To combat deflation, the typical strategy is for the government to increase the money supply. However, there hasn’t been significant interest in borrowing, except by state-owned enterprises. While China had managed to circumvent broad deflation during the global financial crisis in 2009 and again in 2012, the current scenario presents unique challenges. Over the past decade, real estate prices have skyrocketed. As a remedy, last week, Chinese officials urged local governments to implement measures to promote consumer spending. However, there’s a prevalent doubt among international economists regarding the effectiveness of these initiatives. 🌍🤔

Adam S. Posen, the president of the Peterson Institute for International Economics, attributes China’s current economic fragility to its intense response to Covid. He labeled the situation as “economic long Covid.” The aftermath of stringent measures like city-wide lockdowns and mass testing has had a lasting impact on consumer confidence. However, China’s economic issues have been simmering for decades. They have heavily relied on exports and investments since the early ’90s, curbing wages and limiting investment options. This has left citizens with little choice but to invest in new properties and factories. Now, with a surging supply and dwindling demand, along with societal challenges like a falling birthrate and rising youth unemployment, China stands at a crucial economic crossroads. 🇨🇳🦠