The Chinese Slide Into Deflation

China, Featured, Peter Zeihan

By Peter Zeihan

The current Chinese system has been staring down the barrel of a number of serious challenges for quite a while now, and this new economic data just took the safety off that gun.

Between the demographic bomb that went off a few years ago and the lack of a post-COVID recovery, it’s no surprise that China is facing an economic funk. However, years and years of compressed economic damage are on the brink of bursting out and wreaking havoc on the entire Chinese system.

That’s right; we’re talking about deflation. This is only one month of data, so I don’t want to blow this up quite yet…but consumption has plummeted, there are ongoing trade wars, an oversupply of goods and undersupply of demand in both domestic and foreign markets, and that’s not even the whole picture.

We saw deflation take over Japan in the 90s, and it took them nearly 25 years to pull themselves out of it. The Japanese situation was leaps and bounds better than China’s current situation, so if this data is even partially indicative of China’s economic future, we could be looking at the beginning of the end.

Peter Zeihan is a world expert in geopolitics: the study of how place impacts financial, economic, cultural, political, and military developments.

He presents customized executive briefings to a wide array of audiences including financial professionals, Fortune 500 firms, energy investors, and a mix of industrial, power, agricultural, and consulting associations and corporations.

Mr. Zeihan has been featured in, and cited by, numerous newspapers and broadcasts including The Wall Street Journal, Forbes, AP, Bloomberg, CNN, ABC, The New York Times, Fox News, and MarketWatch.

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