"China's Exporters Grapple with Deflation Pressures Amid Economic Dilemma"

China's producer prices have been falling for 15 consecutive months, leading to a plunge in industrial profits and factory activity contraction. Smaller Chinese exporters are facing the threat of survival due to relentless price wars and shrinking business, as higher interest rates abroad and rising trade protectionism squeeze demand. Policymakers are urged to prioritize fixing deflation over reaching growth targets, as sluggish exports necessitate stimulating household consumption. The prolonged factory deflation is exacerbating China's economic challenges, with concerns about overcapacity and inefficient monetary policy.