China's deflation prospect fuels worries about economy

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New data showing China on the brink of deflation has fueled calls for a stronger stimulus package for the world's second-largest economy as its post-pandemic recovery continues to stutter. Consumer price growth in June was flat year-on-year and down 0.2% from the previous month, while factory-gate prices fell at the fastest pace since 2016 as demand for goods weakened, exacerbated due to the slowdown in global economic growth. The CPI figures follow data showing manufacturing activity contracting for the third consecutive month. The situation is in stark contrast to that in the US and Europe, where stubbornly high inflation means interest rates are likely to rise further over the summer. You are viewing a snapshot of an interactive chart. This is most likely because you are offline or JavaScript is disabled in your browser.

China's faltering recovery is taking a heavy toll on the country's youth: More than a fifth of 16- to 24-year-olds were unemployed in May, the highest proportion since records began in 2018 and higher than in countries Job Function Email Database Europeans such as France and Italy. Although jobs are still being created, many are unskilled positions unpopular with college graduates. Crackdowns on the technology, finance and gaming sectors have limited what were once sought-after opportunities among young people. Some blame the skills mismatch on the government, which is trying to tilt the economy toward high-tech manufacturing. But since the sector is not yet ready to absorb all the engineering students coming out of universities, there are not enough graduate-level jobs. Others say that the causes are deeper, that domestic consumption is not growing enough to create jobs.



When you build your manufacturing competitiveness on low wages, once low wages become a problem due to weak domestic demand, you are stuck,” one analyst said. In response, Beijing recently urged unemployed graduates to "roll up their sleeves" and try manual labor, publishing profiles of those who had supposedly made a fortune in low-skilled jobs, such as selling street food or growing fruit, rather than pursuing a career in your chosen field. Perhaps unsurprisingly, the message generated a lot of scorn on social media. The slower-than-expected economic recovery in China has prompted the government in Beijing to seek more foreign investment, but recent tit-for-tat trade sanctions with the US have dented confidence. In that regard, there was progress over the weekend after the visit of US Treasury Secretary Janet Yellen appeared to calm some of the political tensions between the two countries when she spoke about the potential for cooperation commercial and economic.