While the United States is fighting inflation, China—the world’s second-largest economy—seems to have the opposite problem: deflation. In July, consumer prices fell in China for the first time in two years. Several economic issues have hit China since lifting COVID-19 restrictions. There has been a drop in exports and the real estate market has been in a downtown.
China’s economy has dipped into deflationary territory. But what exactly is deflation and why are people worried about it? William Dickens, distinguished professor of economics and social policy at Northeastern University, explains that while the opposite of inflation may sound good, deflation is a problem you don’t want to have…
