China's deflationary spiral deepens, sparking price wars
Chinese companies are facing intense competition due to overcapacity, leading to price wars and job cuts. Consumer prices fell by 0.1%, and producer prices by 2.8% in the first six months. China’s GDP growth is expected to be 5.2% in the second quarter, but the second half may reveal more challenges.
President Xi Jinping called for governance of low-priced competition to combat overcapacity. The ruling party outlined measures to address the issue, warning of economic damage. Policymakers may need to launch a major demand stimulus to ease price competition among producers and internet giants.
The trade war with the U.S. exacerbates China’s overcapacity issues, with tariffs on Chinese electric cars and other goods. Manufacturers are looking to build factories overseas, potentially creating redundant supply. Five out of seven sectors have more capacity than global demand, posing a global spillover risk. 1. The stock market reached record highs today, with the S&P 500 and Dow Jones Industrial Average both closing at all-time highs. Investors are optimistic about the economy’s recovery and the potential for strong corporate earnings.
2. COVID-19 cases are on the rise in several states, fueled by the highly contagious Delta variant. Health officials are urging unvaccinated individuals to get vaccinated and continue practicing safety measures to prevent the spread of the virus.
3. The United States reached a milestone in its vaccination efforts, with over 50% of the population now fully vaccinated against COVID-19. Despite this progress, there are still concerns about vaccine hesitancy and the potential for future outbreaks.
4. The Tokyo Olympics have officially begun, with athletes from around the world competing in a wide range of events. The games are taking place under strict COVID-19 protocols to ensure the safety of participants and spectators.
5. Wildfires continue to ravage parts of the western United States, with thousands of acres burned and communities threatened. Firefighters are working tirelessly to contain the blazes, but dry conditions and high temperatures are making their efforts challenging.
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