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Is China exporting deflation?

Deflation in China has added to disinflationary forces in the advanced economies as its export prices have fallen sharply. The direct impact has not been huge, accounting for only a small fraction of the 4ppt drop in DM headline CPI inflation last year, and the drag will probably ease in the year ahead. However, even gradual further falls in China’s export prices will add to geopolitical tensions.

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