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

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. The official data released by the Chinese Communist Party (CCP) showed the biggest drop in China’s CPI in more than 14 years, which was worse than market expectations. Given the CCP’s history of manipulating data to make things look better, the true picture is likely to be even more grim. China’s economy has not recovered from its costly COVID-era draconian lockdowns. Instead, it went on declining after the pandemic but the regime has publicly been in denial of the economic impacts in its battle to maintain legitimacy....