So, the New York Times has a headline:
China Deflation Fears Raised By Falling Prices For Food and Cars
No. China’s growth is fine, and some products dropping in price is also fine. Car prices are dropping fast because China has a competitive market for car production: they have hundreds. That is driving tech improvements and price competition. This is a good thing, it is not based on “no one has enough money to spend so everyone has to drop prices” which is what caused the Great Depression (the deflationary episode that makes everyone quake.)
I think that China is making a mistake with car production, because of climate change, but it’s not even slightly an indication of the possibility of the bad type of deflation.
As for food, China’s importing more and is coming out of a period where they have multiple huge disease outbreaks and culls for both pork (the primary meat in China) and chicken (the second most common.)
Lower food prices are a good thing as long as wages are increasing, which they are.
The constant drum-beats of doom about the Chinese economy are propaganda driven insanity. The Chinese economy is still growing faster and is overall stronger than any Western economy.
If you want a summary of what the Chinese are doing (deliberately deflating housing prices and switching investment into manufacturing, among other things), I wrote a long summary article last year on the Chinese economy’s transition last year. Read it, because you won’t find this out from any Western mainstream media source, except possibly the Financial Times (and even then, not put together properly.)
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