Ivanhoe Mines Ltd T.IVN

The threat to the world’s second biggest economy

[Dragonflyinvest]

Worries about falling prices and the threat they pose to the world’s second biggest economy are reaching a crescendo.
 
Specifically, people are concerned that if the Chinese government doesn’t act quickly to address deflation, the economy could suffer permanent damage.
 
Falling prices have the potential to trigger a downward spiral as households facing reduced incomes spend less or postpone purchases because they expect prices to decline even further.
 
Corporate revenues would also suffer, stifling investment and leading to more salary cuts and layoffs. There are already signs this spiral is in motion, with some entry-level  salaries dropping from a high two years ago.
 
The crisis of confidence is hitting equity markets, sending a key gauge of Chinese stocks to the lowest since early 2019 this week.

China’s Deflation Means It’s Now or Never for Saving the Economy - Bloomberg