Analysis: Why Helping Exporters Can Ease China’s Price Problem

Weak prices have become an urgent economic challenge for China. At the core of the issue is insufficient domestic effective demand, which has been exacerbated by the global tariff war waged by U.S. President Donald Trump.

This has been reflected by official figures. The producer price index (PPI) dropped 3.6% year-on-year in June, the largest decline since July 2023, while year-on-year growth in the consumer price index (CPI) has long hovered around zero.

China’s Growing Deflationary Pressure

This article examines the impact of the U.S. tariff war on prices in China, how this situation may evolve, and potential countermeasures.