,wall StreetThe Daily reported that “China’s economy appears to have escaped a devastating bout of consumer deflation, at least for now.” Things are looking up on the margins. But the bad news is that this is all based on a very short base period, and the Chinese government needs to take more measures to support the real estate market.
China’s National Bureau of Statistics has stressed several times this year that there is no deflation in China’s economy at present or in the next phase. At a press conference last week, China’s National Bureau of Statistics said that CPI growth is expected to continue to pick up again, and the decline in PPI is expected to slow.
The Wall Street Journal reported that after experiencing a severe period in June and July, China’s key economic data for August released last Friday showed clear signs of improvement: Consumption and industrial growth exceeded expectations, officials said.employmentImprovements are also taking place. But in the major housing market, after a long-term recession, the decline in house prices in third- and fourth-tier cities has accelerated.
The report noted that all this makes a long-term decline in consumer prices less likely, which could trap China in a vicious cycle of falling prices and extreme consumer austerity similar to what Japan experienced in the 1990s. Chinese consumers remain very cautious and savings levels still appear to be much higher than before the pandemic, but the situation has improved significantly in recent weeks.
In particular, the fortunes of job seekers in the service sector seem to be improving. The service industry is the largest sector of the Chinese economy. The services employment sub-index PMI (Purchasing Managers Index) fell sharply this spring in parallel with manufacturing employment, but has now begun to recover, although it is still below the bullish-bearish line. According toGoldman SachsData on some high-frequency indicators of consumer activity, including traffic congestion in major cities, also began to come back in late summer.
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