Part 7/11:
Despite delivering over 9% returns in 2024, exclusive of currency fluctuations, China’s economy is ensnared in a deflationary quagmire, with falling producer prices and stagnating consumer inflation. Households and companies, having seen substantial wealth eroded by the ongoing housing crisis, have drastically curtailed spending, leading to a shortfall in demand. Historical precedence indicates that overcoming a deflationary cycle necessitates overwhelming fiscal stimulus—a strategy that Chinese policymakers appear hesitant to adopt, given the burgeoning debt situation.