deflation

Speaking at the Central Economic Work Conference on Monday, President Xi delivered one of his sharpest economic messages of the year. He openly criticized inflated statistics, “paper-only projects,” and growth that exists only in reports — not in the real economy.
According to People’s Daily, the Chinese president Xi warned top leaders against “reckless planning,” announcing that the system will now hold officials accountable when they chase hype instead of meaningful development.
Xi said that all future national strategies must:
be based on facts,aim for real, sustainable growth,avoid polished reports that simply hide deeper issues.
He singled out several examples of wasteful or artificial projects, including:
giant industrial parks with no real use,chaotic expansions of local expos and forums,inflated economic statistics,and staged “construction kick-off ceremonies” created only for publicity photos.
Xi wants economists to follow real-time data, not curated narratives
President Xi said that officials who make “unreasonable demands” or burn through resources without careful thinking will face strict consequences. He emphasized that China’s fiscal space is far tighter than in the past — rising local government debt limits what Beijing can spend, making short-term GDP manipulation dangerous and unaffordable.
He also acknowledged that access to economic data inside China is sensitive and heavily controlled, making it difficult for outside analysts to see the true state of the economy.
Because of this, Xi declared a major shift:

GDP will no longer be the main metric used to evaluate officials.

Instead, their performance should be judged by how well they protect people’s well-being, maintain stability, and build a foundation strong enough to support long-term growth.
His remarks came at a tense moment. Fresh data showed that China’s investment activity has declined for three consecutive months:
Fixed-asset investment Jan–Nov: –2.6% YoYAnalyst expectations: –2.3%October result: –1.7%
The slide increases pressure on policymakers to stop the downturn before it drags the wider economy with it.
Last week, the Central Economic Work Conference announced that Beijing plans to stabilize and revive investment, including an increase in central-government spending — a move many consider the first open admission that China’s investment engine is losing momentum.

Weak demand, falling AI stocks, and cautious consumers
Retail figures added to the concerns:

last month’s retail sales were the weakest in three years, showing fatigued consumers and households still nervous about the prolonged property downturn, now entering its fifth year.
The IMF also urged Beijing last week to implement stronger measures to boost demand and combat persistent deflation.
Even China’s tech sector felt the pressure.

Shares of the AI chipmaker Moore Threads Technology Co. fell after the company revealed that:
it will move 90% of its IPO funds (about 7.5 billion yuan) into safe deposit products like time-locked deposits and certificates of deposit,instead of using the money for chip development as initially promised.
Traders took this as a clear sign of caution.
This came after the stock soared 613% over six trading days following its debut — before dropping as much as 6.9% on Monday.

Conclusion: Xi calls for a return to reality — and China stands at a crossroads
President Xi’s message was unusually tough:

China can no longer afford projects built only for show or economic reports that distort reality. The country is facing weak demand, falling investment, deflationary pressures, and a tech sector that is turning cautious.
Beijing now faces a monumental task:

to shift from “growth on paper” to genuine productivity and stability, even if the transition is painful.

#china , #economy , #AI , #worldnews , #deflation

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#الانكماش
#deflation Deflation is a general and continuous decrease in the prices of goods and services in an economy, which increases the purchasing power of money. It is the opposite of inflation, which is characterized by high prices.

### **Causes of Contraction:**
1.
2.
3. **Tightening Monetary Policy**: When central banks raise interest rates or reduce cash supply, spending and investment may decrease.
4.

### **Negative effects:**
**Positive**: Increasing the purchasing power of consumers, especially for those with fixed income.