Unraveling China’s Economic Paradox: The Perplexing Dynamics of Deflation and the CCP’s Currency Issuance

Unraveling China’s Economic Paradox: The Perplexing Dynamics of Deflation and the CCP’s Currency Issuance
Chinese yuan banknotes are seen on a table at a bank counter in Hangzhou, China, on Aug. 30, 2019. STR/AFP via Getty Images
Jessica Mao
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News Analysis

China’s latest Consumer Price Index (CPI) for January fell 0.8 percent year-on-year, signaling a continued risk of deflation in the economy. However, between 2021 and 2023, China’s monetary authority issued about 54 trillion yuan (US$7.6 trillion) of banknotes. Despite the increase in money supply, it appears to have failed to impact the economy positively.

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