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How do central banks maintain economic stability?

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Deflation in China

The impact on China and the global economy

In this article, Graeme McSherry examines the deflationary trend in China since mid-2023, focusing on its causes and global impact. This deflation, marked by falling prices and reduced consumer spending, raises concerns about economic stability. The article also discusses the potential parallels with Japan’s longterm deflation and the implications for global trade and competitiveness

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macroeconomic objectives and policy, international economics, economic performance indicators, monetary policy and central bank role

Deflation is a sustained decrease in the price level over time. China, the world’s second-largest economy, has been suffering from falling prices since summer 2023. Although falling prices may sound desirable, the impact on the local economy and, in a hyper-globalised world, on the economy of trading partners, is damaging.

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Previous

How do central banks maintain economic stability?

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Economics in the real world: The cost-of-living crisis and the airline industry

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