Simply put, in many crucial economic sectors, China is producing far more output than it, or foreign markets, can sustainably absorb.
When profits shrink, companies boost production higher and drop prices lower to generate enough cash to service their debt.
This dynamic has been destabilizing the global market with a flood of cheap Chinese exports creating a sharp backlash in the form of stiff tariffs.
The domestic market is also marked by overproduction and cutthroat price competition that risks sending the economy into deflation.
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