China's Economy Faces Deepening Deflation Challenges Amid Weak Demand

China is grappling with mounting deflationary pressures, as highlighted by the experiences of residents like Zhou Fujin, who faces financial strain from a depreciating apartment and declining rental income. Deflation, marked by falling prices, signals weak demand and stagnant economic growth, with the country experiencing its longest period of deflation since the 1960s. While Premier Li Qiang has emphasized boosting household consumption in his government work report, economists are skeptical about the effectiveness of the proposed measures, which include minimal hikes in welfare benefits. Analysts note that the trade war with the U.S. and overproduction in the industrial sector are exacerbating the deflationary climate, compelling Chinese policymakers to explore options for increasing household incomes. As the annual session of China’s parliament approaches, observers are watching for potential government spending initiatives and any adjustments to the economic growth target, which has remained near 5% for two years. The situation reflects broader economic challenges, with significant household wealth losses and pressures on the real estate market contributing to consumer hesitancy.