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00:00China's economy is facing a new threat. While most of the world battles
00:04inflation, China is grappling with consumer prices that are just too low.
00:09And it could be worse than the official numbers tell us. China's official
00:13consumer inflation data offers limited detail and it's not entirely clear how
00:18it's tracked. Bloomberg tracked 67 everyday items. I found that prices are
00:23falling in 51 of them. And the pain is spreading. A brutal price war is breaking
00:29out across China's entire economy. If one company starts cutting prices, their
00:34competitors have no choice but to follow. The result? Falling prices, collapsing
00:40profits and no one wins. That phenomenon is called involution but essentially it's
00:46about the fundamental imbalance between supply and demand. This isn't just a
00:51competition problem. It completely crushes corporate earnings and slams workers
00:56paychecks. Last year, 25% of Chinese listed companies made a loss. That's the
01:02highest percentage this century. And in 2024, a third of companies cut jobs. This
01:09shows China is in a deep deflationary spiral. If consumers stop spending,
01:14businesses stop investing, the economy slows down and debt piles up. Beijing is
01:19trying to hit the brakes. In July, President Xi Jinping and his top lieutenants
01:24ordered a crackdown on excessive consumption. But with a property slump
01:28deepening and consumers too nervous to spend, most experts think the
01:32government's fix won't even move the needle. Our tracking suggests prices in
01:37China are set to fall for the third year in a row in 2025. This is the world's
01:42second largest economy. The longer prices stay low, the greater the risk that
01:47growth will stall for years, even decades.
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