**China Faces Rising Deflation Risks Amid Economic Slowdown**

China is grappling with a challenging economic environment as inflation rates decline and deflation risks increase. In September, the consumer price index (CPI) rose by only 0.4%, indicating a significant slowdown in price growth. Concurrently, the producer price index (PPI) fell more than anticipated, underscoring deflationary pressures.

Deflation, characterized by falling prices, can lead to reduced consumer spending and lower demand. This trend is evident in China, where companies are cutting prices to stimulate sales, potentially leading to job cuts and wage reductions, further eroding consumer confidence.

Experts emphasize the urgency for fiscal stimulus to counteract deflation and stimulate demand. Although discussions are ongoing, no substantial measures have been announced. Investors are keenly awaiting decisive actions from Beijing.

China’s finance minister, Lan Fo’an, indicated potential for increasing the fiscal deficit to support the economy. Economists suggest a stimulus package ranging from 2 trillion to over 10 trillion yuan may be necessary. While the government has implemented minor measures, such as interest rate cuts and housing market support, these may be insufficient.

The People’s Bank of China (PBOC) has also taken steps to boost market confidence by cutting interest rates and extending real estate support measures. Additionally, the PBOC launched a $71 billion program for institutional investors. Despite these efforts, stock market volatility persists, highlighting the need for stronger fiscal interventions.

China must act swiftly with robust fiscal measures to prevent further economic slowdown and deflation. Investors are closely monitoring for any updates from Beijing, hoping for a comprehensive fiscal plan to be unveiled soon.