China's Post-COVID Recovery Stalls, Slipping into Deflation

China has officially entered a period of deflation for the first time in two years, with the consumer price index dropping 0.3% year-on-year in July. The country's post-pandemic recovery has stalled, as reflected in the tenth consecutive month of decline in the product price index. Reduced consumption and weakened domestic demand have led to a sharp decline in imports and exports, posing challenges for the Chinese economy. Authorities are implementing policy measures to address the situation, but face "new difficulties and challenges."