Monday, May 11, 2009
Leading thinkers are today debating whether or not China is experiencing deflation.
The Telegraph writes:
It was the third month of deflation in a row ...
However, commentators said accelerating money supply, combined with an enormous surge in bank lending, meant that prices were unlikely to keep falling in the long term and would probably start rising again by the end of the year.
Mish - a leading proponent of the theory that global deflation is the trend for the foreseeable future - believes that China will get dragged down by deflation:
Consumer prices are falling year over year in China. Bear in mind that falling prices do not constitute deflation which is a monetary phenomenon (a reduction in money supply and credit) not a price phenomenon. In this case we see both.