As China gets set for its pivotal meetings this week, the Wall Street Journal writes about how a manufacturing export boom is “a classic recipe for falling prices.”‘
They warn that Beijing is looking to manufacturing and exports to boost the economy. It’s a sequel to the early 2000s boom that focused on cheap manufacturing. This time, it’s moved up the value chain to cars, computer chips and complex machinery.
The WSJ highlights that China producer prices have been falling for 16 months, in part because of sluggish domestic demand.
“That disinflationary impulse is showing up around the world. The price of U.S. imports from China fell 2.9% in January from a year earlier, while the price of imports from the European Union, Japan and Mexico all rose.”
On the flipside, the focus continues on China demographics. The marriage rate has been halved in 10 years while the birth rate has also been nearly halved. Migration to cities has also fallen by around 40%.
The Shanghai Composite rose 0.4% today.