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Why is China's CPI still low despite a slight increase?
China's consumer price index rose just 0.1% in June, but underlying demand remains weak. Factors like industrial oversupply and cautious consumer spending keep prices subdued, preventing a strong inflationary trend.
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How are global economies responding to persistent deflation?
Many countries are implementing policies like low interest rates and fiscal stimulus to boost demand. However, deflation can lead to reduced investment and economic stagnation, making it a tricky challenge for policymakers worldwide.
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What policies are countries using to stimulate demand?
Governments are deploying measures such as lowering interest rates, increasing public spending, and offering incentives to consumers and businesses to spend more and boost economic activity.
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Could China's deflation impact the global market?
Yes, China's economic health is closely linked to global trade. Persistent deflation could slow down exports, affect commodity prices, and create ripple effects across international markets.
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What are the main reasons behind China's deflation?
Weak domestic demand, excess industrial capacity, and low consumer confidence are key factors. Additionally, ongoing trade tensions and structural economic shifts contribute to the deflationary pressures.
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Is China's government doing anything to combat deflation?
Yes, China is considering bolder policies to stimulate household incomes and stabilize employment. The government aims to shift focus from export-led growth to boosting domestic consumption.