Rampant inflation is raging around the world. Meanwhile, China, the world’s second economy, is on the verge of prolonged deflation for the first time in 15 years. The country’s consumer price index remained unchanged year-on-year in July. Besides, China’s producer price index has been declining for several months. Most countries are trying to tame soaring prices while China is facing persistent deflation. The Chinese authorities have almost no tools to fix this problem. In June, inflation remained unchanged and producer prices continued to slump. This indicates that the national economy is recovering much slower than expected. The PPI plummeted by 5.4%, posting the biggest drop since December 2015. Considering such an economic environment, the country's regulator should take action and support the economy, but there are few means to do it. Nevertheless, the Chinese add to their homeland’s tangle of problems. In China, people face rising costs and declining incomes. Thus, they choose to significantly reduce spending, trying to save money. The government proposed a plan to spur domestic demand but the plan failed to bring fruit. Currently, the authorities should take another approach to boost economic recovery.
