Author: He-Ling Shi, Monash University

China and the rest of the world seem to be living in two different universes. China is cutting interest rates to avoid deflation while everybody else is fighting inflation.

China’s economy has been hit by a series of bad news. Data released by the National Bureau of Statistics of China indicated a year-on-year decrease of 0.3 per cent in the Consumer Price Index (CPI) for July 2023 and a year-on-year decrease of 4.4 per cent in the Producer Price Index (PPI). This marked the first simultaneous annualised decline in China’s CPI and PPI since November 2020.