As Britain tries to lower its inflation, on the other side of the world, the world’s second largest ecomony is suffering a titanic shift in the economy leading staggering deflation.
The Consumer Price Index for the far eastern powerhouse dropped by 0.5 percent in November which is reportedly the biggest single fall since the world was gripped by the COVID-19 pandemic.
And in a worrying trend the rate of deflation has increased from the 0.3 percent in October according to Chinese authorities.
In August China’s biggest property developer, Country Garden, reported an enormous loss of £5.2billion as the overheated housing market bubble burst.
At the same time the country’s government made the decision to suspend reporting of youth unemployment levels as the figure reached a record 20 percent.
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Analysts from the Citi banking group told CNN: “China’s deflation situation is deepening with the triple whammy from domestic food prices, international oil price corrections and weak domestic demand.
“Signs of price weakness are now spreading from goods to services.”
According to the BBC, the downturn has also harmed foreign investment with a £9.6billion deficit recorded this year for the first time since records began in 1998.
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This month credit ratings agency Moodys issued a warning downgrading its assesment of the ability of Chinese authorities to handle the country’s debt from stable to negative.
A statement from China’s finance ministry said: “China’s macroeconomy continues to recover and high-quality development is steadily advancing.
“It is unnecessary for Moody’s to worry about China’s economic growth prospects and fiscal sustainability.”
In the last two months China’s President Xi Jinping has met with both President Biden in the US and with European Commission President Ursula von der Leyen in Beijing.
Speaking after the meeting Ms von der Leyen said: “China is the EU’s most important trading partner, but there are clear imbalances and differences that we must address.”
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