China’s Rising Deflation Risk Pressures CNY and Luxury Sector Amid Consumer Pullback #news #market

As China’s economy continues to struggle with weak domestic demand and property market distress, deflationary trends are reshaping the behavior of middle-class consumers. Recent indicators suggest a growing tendency among Chinese citizens to delay or downgrade discretionary purchases, including in premium categories such as luxury goods. A case in point is Mendy Li, an energy sector employee whose salary was recently cut by 10% due to state-mandated austerity. With her family’s real estate assets having lost half their value, she has resorted to buying second-hand luxury items, illustrating a broader consumer retrenchment.

This evolving trend adds to the macroeconomic concerns about entrenched deflation—an environment in which falling prices disincentivize spending and investment, potentially stalling GDP growth and monetary policy effectiveness.

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