China|China’s stock exchange rates have already fallen almost to the level of January 2019.
The summary is made by artificial intelligence and checked by a human.
China is increasingly threatened by deflation, reports Bloomberg.
In August, the consumer price index was still in the positive.
Chinese stock prices have fallen, and the CSI 300 index is at its lowest since January 2019.
China has tried to prevent exchange rate declines with subsidized purchases, but no significant results have been achieved.
Deflation in other words, the cycle of falling prices threatens China more and more clearly, reports the news agency Bloomberg.
The latest Chinese inflation statistics published on Monday show that, with the exception of rapidly rising food prices, the prices of all other goods and services are almost unchanged.
However, the general consumer price index was still positive in August.
In deflation, prices and wages generally fall and the value of money rises. For example, debts must then be paid with “more valuable” money. The phenomenon often leads to payment defaults and bankruptcies.
The threat of deflation has been hovering over China since last year, and now the concern seems to have intensified, writes Bloomberg.
If deflation is only evaluated by comparing the prices of all new goods and services manufactured in China to a year ago, China has already been in deflation since June 2023, Bloomberg states.
Economists of the French BNP Paribas bank, among others, estimate this.
In many state-supported industrial sectors, entry-level wages for employees had already fallen by almost ten percent from the 2022 peaks in August, according to statistics from Caixin Insight Group and Business Big Data, according to Bloomberg. Such industries include, for example, the manufacture of electric cars and renewable energy projects.
To the same at the time, China’s stock exchange rates are still falling.
The CSI 300 index, which follows three hundred major Chinese companies on the Shanghai and Shenzhen stock exchanges, is derailing to its lowest value on Tuesday then January 2019.
For comparison, in the United States the S&P 500 index is over in the same period doubled.
This year, the CSI 300 index has fallen by around seven percent.
Stock exchange rates the bill is a serious challenge to the Chinese president Xi Jinping to the administration. The poor development of the stock market eats away at the confidence of consumers and companies and is for its part plunging the economy into a spiral of falling prices.
For Chinese who own shares in listed companies, the drop in exchange rates also feels like a decrease in their own wealth.
China has tried to prevent price drops with subsidized purchases, but so far they have not been significantly successful.
According to Bloomberg, China had bought $66 billion worth of index-linked mutual funds (ETFs) this year alone to prop up exchange rates.
China is the world’s second largest economy after the United States.
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