China faces the longest deflation streak since the Mao era in the 1960s

China has failed to break a deflationary cycle and is now on course for the longest sequence of economy-wide price drops since the 1960s.

According to economists, this exposes a crucial weakness likely concealed by a GDP recovery at last year's end.

Official data are expected to reveal that deflation continued for the second consecutive year in 2024, as predicted by the majority of experts.

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According to major Wall Street banks like Citigroup and JPMorgan Chase, it will continue through this year.

That will mark a stretch not seen since the great leap forward era of Mao Zedong in the 1960s when China experienced a recession and a famine that killed millions of people.

China’s deflation threat causes concern

According to a Bloomberg poll of economists, the gross domestic product deflator will hit minus 0.2 per cent in 2025.

However, the economy is still predicted to have risen at a quicker speed in real terms in the December quarter.

To give a little context, the average in the ten years preceding the pandemic was 3.4 per cent.

If Chinese exporters are forced to seek internal consumers due to the impending trade war with the US, the situation might become much more dire for the country.

The data on Friday will provide a view of the struggling property market and retail sector.

That comes just days before Donald Trump's return to the white house.

He has threatened trade tariffs as high as 60 per cent on imports from China.

That has the potential to destroy commerce with the world's second-largest economy.

(With inputs from the agencies)