Posted 12/21/2023, 12:00:13 AM
China Grapples with Deflation Risk as Prices Decline, Sparking Debate on Policy Response
- China's consumer and producer prices declining, sparking deflation concerns
- Debate on whether China should raise inflation target and stimulate economy or risk asset bubbles
- Comparisons drawn to Japan's 'lost decades' of deflation after 1990s asset bubble burst
- Suggestions to set lower limit on inflation target to raise expectations
- Policymakers acknowledge deflation risk, implying more accommodative monetary policy ahead