Cover Story: How Can China Deal With Deflationary Pressure?

China’s economy ended 2023 having experienced a patchy post-pandemic recovery, albeit ultimately posting a slightly higher-than-expected growth rate of 5.2%. However, doubts over the world’s second largest economy linger as deflationary pressures mount and murmurs of what may await quietly begin to dominate talk among economists and policymakers.

Although the economy showed some signs of recovery in 2023, prices have not improved in tandem, with key economic indicators signaling a persistent decline, such as the consumer price index (CPI) rising at the slowest pace in 23 years. This has served to deepen fears of deflation and sparked calls for more supportive policy measures.