Introduction China is living through its longest stretch of deflation since it opened up to market reforms in the late 1970s. Prices have been falling or stagnant for roughly ten consecutive quarters. Consumer inflation averaged 0% in 2025. Producer prices have been negative for more than three years. This is happening inside a $21 trillion economy, the second largest in the world. It is also happening at a moment when most other major economies are still trying to bring infl