China nears deflation trap as rail freight collapses

Economic travails are not just an American phenomenon.

Railway freight in China’s Shanghai region plunged 31pc in January and industrial production fell 12pc, dashing hopes that Beijing’s stimulus policies will soon begin to fuel recovery.

The country’s central bank said the economic outlook was going to bad to worse was still gathering pace, rains the risk that China could tip into a Japan-style deflation trap.

“External demand is shrinking, some sectors have overcapacity, and urban unemployment is rising. Downward pressure on economic growth is increasing. There exists a big risk of deflation,” said the bank. Factory gate inflation has dropped to minus 3.3pc. Emphasis added.

…uh…NEGATIVE inflation…that sure looks like deflation to me.

And Hilary was just there begging them to keep on buying U.S. bonds?  Yeah. Right.

We’d be better to “batten down the hatches and rig for heavy seas”, to apply an appropriate bit of naval terminology…the Chief is guessing that under the circumstances the ChiComs just might have other things on their mind than propping up our deficit spending.