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Is China Still Exporting Deflation?
Well, the answer is yes but, more importantly, such pressure appears to be easing. This assessment probably comes as a surprise to many, including ourselves. One might have naturally concluded that President Trump’s trade war, which has led to much higher tariffs on China, would have resulted in the opposite effect (i.e., greater downward pressure on Chinese export prices). The rationale here is three-fold: (1) China’s economy is still battling deflation, highlighted by July’s 3.6% y/y decline in producer prices, (2) Chinese manufacturers shipping to the U.S. are likely facing pressure from buyers to share some ... (full story)