China Struggles to Combat Deflation as Consumer Prices Drop

China is facing a deepening deflationary crisis as the Consumer Price Index (CPI) dropped 0.5% in November, the largest fall since the pandemic began. This has prompted calls for urgent action from Beijing to boost demand and prevent a downward spiral of prices. The country has been battling weak prices throughout the year due to a property market slump and weak spending. The worsening deflationary pressure raises doubts about China's economic recovery, and analysts are urging policymakers to take immediate action to prevent a vicious loop between deflation, confidence, and economic activity. Investors are eagerly awaiting details from the upcoming Central Economic Work Conference for insights into next year's economic policy, including potential cuts to the reserve requirement ratio and interest rates.