China's Economy Tips Into Deflation, Threatening Recovery From Pandemic

"China’s economy is tipping into deflation as the nation’s recovery from the COVID-19
pandemic falters.

The anxiety in China’s business sector is growing as comparisons to Japan’s “lost decades” are made.

China’s problems stem from the way it ended up dealing with the pandemic. The massive shutdowns of big cities and provinces because of just a few positive tests damaged the economy over a far longer period of time than in the West. And then when civil unrest threatened the government, it quickly lifted restrictions on movement and virtually everything else.

More than 80% of the Chinese population became infected with COVID-19 after restrictions were lifted two weeks before Christmas. China stopped counting infections and deaths months ago, but it’s believed that a million people may have died during the worst of the pandemic.

The Chinese government never offered any economic stimulus to restart the economy. 

Investors have been anxiously waiting for policymakers to inject stimulus after the powerful Politburo meeting last month, with the stock market mostly underwhelmed by the lack of concrete action." PJM