Speaking to ABC News, Ms Stevenson-Yang said: “Well, my basic assumption about China, I think the Chinese economy is really going to crash. I think China is going to unleash deflation on the world very soon, like in third quarter of this year”. Lockdowns within China, declining economic power in the West and the emergence of competitors are all factors contributing to China’s deflation – a gradual decline in the prices of goods. While assets and prices decline over time, buyers’ purchasing power increases. This economic phenomenon contrasts with inflation, which has the opposite effect – raising prices in the economy and reducing the purchasing power of buyers. While it may seem like good news, deflation is usually the sign of an impending recession. When deflation occurs, consumers tend to delay purchases in the hope that prices will continue to fall. However, producers then bear the brunt of reduced consumption and generate less income, which can lead to unemployment and higher interest rates. This cycle creates higher unemployment, lower prices and even less spending. As a result, deflation leads to more deflation. When asked why it would happen so soon and spread so quickly, Ms Stevenson-Yang said: “Because China is responsible for a huge consumption of commodities. And so as their demand goes down, then commodity prices go down. And that it’s an international influence.” READ MORE: Five bad news for Putin: Russia’s problems laid bare
