BNN Bloomberg Business has a report on China's economy that is gloomy, here are some key excerpts. Hat tip to Stephen Green blogging at Instapundit for the link.
The gross domestic product deflator will likely extend its current five-quarter drop into 2025, according to Bloomberg Economics and analysts at banks including BNP Paribas SA. That would amount to China’s longest streak of deflation since data began in 1993.
The danger for China is deflation could snowball by encouraging households reeling from falling paychecks to cut back on spending, or delay purchases because they expect prices to fall further. Corporate revenues will suffer, stifling investment and leading to further salary cuts and layoffs, bankrupting families and firms.
It’s a cycle the world has seen before in Japan starting in the 1990s during a period that came to be known as its “lost decades” — when a grinding stagnation followed a burst bubble in real estate and financial markets.
Meanwhile, the deflationary mindset is starting to take hold. Consumer confidence is hovering at a record low, and households report a growing willingness to save instead of spending or buying homes.
I am old enough to remember when it looked like Japan Inc. would "buy the world." You saw echoes of that in the films Die Hard and Rising Sun. People touted the "Japanese Management" model, some of my colleagues taught aspects of it. I didn't as I believed it was culture-specific - worked for them, not for us.
Then Japan went into a slump that lasted decades. Japan eventually recovered but literally nobody fears (or emulates) them any longer. It is my hope China will follow the Japanese path, the above analysis suggests it may do so.
