China still in shambles: The world’s second biggest economy is experiencing outright deflation.

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China’s economic woes echo the depths of the 2008 financial crisis, only magnified tenfold. The world watches with bated breath as the second-largest economy grapples with outright deflation and faltering industrial profits. Despite early signs of robust growth, the reality of China’s economic landscape paints a bleaker picture.

Industrial giants in China report a stark 3.5% decline in profits year-on-year for March, attributed to waning exports and persistent deflationary pressures. Even as year-to-date profits show a modest rise, the momentum of recovery falters, casting doubt on the sustainability of China’s economic resurgence.

The looming specter of a yuan devaluation looms large, with potential repercussions reverberating across global markets. If the Chinese authorities permit a USDCNY adjustment, analysts anticipate a move towards the 7.75-8.00 range, marking a pivotal macro event for 2024. Such a move underscores China’s desperation to salvage its faltering economy, signaling stormy waters ahead.

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Meanwhile, diplomatic tensions between China and the US escalate, with warnings of rising “negative factors” in bilateral ties. The world watches anxiously, mindful of the potential for conflict amidst geopolitical rivalries. As China grapples with internal economic strife and external diplomatic challenges, the global community braces for the ripple effects of this unfolding saga.

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www.bloomberg.com/news/articles/2024-04-27/china-industrial-profits-decline-as-demand-from-overseas-stalls?leadSource=reddit_wall

citizenwatchreport.com/soon-short-term-swap-markets-show-deeply-skewed-demand-supply-conditions-for-the-yuan-which-could-potentially-lead-to-panic-and-spillovers-to-bond-and-equity-markets/

archive.is/20240426063410/https://www.ft.com/content/246c9e16-1dc9-432d-990c-11660f9c7d56#selection-1557.0-1563.129

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