Part 2/10:
Deflation is defined as a sustained decline in consumer prices across goods and services, contrasting sharply with disinflation, where price rises slow down. Currently, China is enduring its longest period of deflation since the era of Mao Zedong in the 1960s. Forecasts predict that if the current trend continues, China may witness its third consecutive year of falling prices by 2025.
While deflation may appear beneficial to consumers in the short run due to lower prices, it creates substantial long-term economic distress. Without conducive consumer spending and business investments, economic stagnation looms. Central to this crisis is weak consumer confidence sparked by persistent economic uncertainty and a staggering real estate sector that has not shown signs of recovery.