Hello everyone, welcome to News Five, today’s co-hosts are Qin Peng, Lin Lan, Fu Yao, Jin Shi, and me (Qin Yue). Five different perspectives collide to bring you into the rich world of news. Feel free to subscribe and like our independent channel.
Today’s focus: China enters a downward spiral into deflation! The statistics bureau reveals the crisis; Shanghai issues 4 billion in consumer vouchers, a drop in the bucket; consumption of goods is stagnant! Overcapacity may lead to trade disputes; Apple and Huawei clash again, this phone is too popular; Bankers warn: 10 trillion yuan needed to save the economy; Xi criticized as spouting nonsense? Leading to negative consequences.
The pressure of deflation in China is intensifying. According to recent data from the Chinese Communist Party’s statistics bureau, in August of this year, China’s Consumer Price Index (CPI) rose by 0.6% year-on-year, with the core CPI excluding food and energy prices only increasing by 0.3%. This means that aside from food prices, most areas of the economy have not seen growth in consumer prices, amidst declining incomes.
It is evident that the crisis in the real estate market is dragging down the entire economy, with real estate developers and related industries scaling back investments. Real estate has been a key asset for Chinese families’ wealth accumulation, but now people are tightening their purse strings. Reduced consumer spending is deepening the deflationary pressure.
Question one, Jin Shi, faced with deflation, Shanghai has started issuing 4 billion in consumer vouchers, and some provinces are also offering various forms of consumer subsidies. Is this a big move? Can it stimulate domestic demand?
Question two, accompanying “deflation,” inadequate consumer demand leads to overcapacity issues. Typically, when there is overcapacity, businesses reduce production, but Chinese enterprises are still producing in excess.
An article by China’s financial media Securities Star points out that China manufactures 75% of global air conditioners, 86% of photovoltaics, 81% of lithium batteries, 66% of new energy vehicles, and more. For instance, in photovoltaics, the production capacity is double the global demand; in lithium batteries, it is 1.6 times.
The Wall Street Journal exclusively reported on the 17th that senior U.S. official and Deputy Treasury Secretary John Shangbo will lead a delegation to Beijing this week and express concerns regarding China’s overproduction.
Lin Lan, the Chinese Communist Party officials staunchly deny overcapacity at present, calling Western accusations “slander.” What is the truth? Ostensibly there is overcapacity, so why continue overproducing? Isn’t that a losing business proposition?
Yes, the Chinese Communist Party has set ambitious goals, but now it appears to intensify the trade war instead, with countries responding with countermeasures, making it even more difficult for China to engage in low-cost dumping abroad.
Internally, consumer willingness is currently low, with Bloomberg predicting that China’s spiral deflation has reached a dangerous new stage and may continue until 2025.
Question three, Qin Peng, do you think it will take another two years to emerge from deflation? Japan experienced deflation, leading to the Lost Decade, even some saying the Lost 30 Years. What do you think will happen if deflation persists?
Question four, we see many data showing that the real estate market is cold, with Chinese people downgrading their daily consumption. However, one consumer index unexpectedly skyrocketed; Apple announced on the 13th that the latest iPhone 16 was available for pre-order at its Tmall flagship store in China on September 13th, remaining at the top of Tmall’s hot search list for a week, with a surge in popularity by 493%. The pre-order total on “Tmall” that day had exceeded one million units.
Fu Yao, with declining consumption on one hand and iPhones selling out on the other, why this “contradictory” phenomenon?
The Wall Street Journal published an article this week suggesting that in the face of deflation, why isn’t the Chinese Communist Party taking action? Additionally, investment banking experts warn that China’s deflation problem is becoming increasingly urgent, and injecting 10 trillion yuan into the economy within the next two years could revive it.
Question five, panelists, why isn’t the Chinese Communist Party taking action? The CCP never seemed to be hesitant about printing money or causing inflation. Are they unaware? Indifferent? Or unable to act?
Fu Yao: No willingness…
Jin Shi: No ability…
Qin Peng: Indifference…
Lin Lan: Unaware…
Whether it’s the CCP’s lack of willingness to save the people in dire straits or the duplicitous nature of the system, it is hoped that everyone in the torrent of this era believes that even in the darkest moments, dawn may be near. Let us anticipate the dismantling of this system and the day when China truly returns to the hands of the Chinese people. Thank you for watching this episode of News Five. See you next time.
Production Team of News Five