China's Deflation: Prices Plummet for the First Time in 2021

China's consumer prices have fallen for the first time in over two years, with the Consumer Price Index (CPI) declining by 0.3 percent in July. This deflation, coupled with a 14.5 percent drop in exports, reflects a darkening outlook for the Chinese economy. Lower prices typically lead to reduced consumer spending and production, potentially causing layoffs and salary cuts. Beijing has implemented various policy measures to support the economy, but the weakening domestic demand may require additional fiscal stimulus.