China's economy has crawled out of the pandemic far below the pace of what most analysts expected, and if policymakers don't step in with sufficient support in 2024, a "debt-deflation spiral" could ensue.
Deflation and falling stocksThe researchers said China's leadership has failed to address the lopsided supply and demand dynamics in particular.
Meanwhile, deflation has crushed corporate earnings and stock prices in China, as well as wage growth and tax revenues.
Nominal GDP grew at 4.6% in 2023, 0.6 points below real growth.
"The economy could fall into a debt-deflation spiral without adequate policy support."
Persons:
Gene Ma, Phoebe Feng, Ma, Feng, Banks
Organizations:
Wall Street, Institute of International Finance, CSI, People's Bank of
Locations:
China, Beijing, People's Bank of China