China’s Central Planning Is Triggering a Deflation Doom Loop

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What was long predicted is now playing out in real time: China’s centrally planned economy is sliding into a deflationary doom loop. Reports from Shanghai’s largest clothing market show vendors overwhelmed not with sales—but with returns. Retailers are sending back unsold inventory, revenues are collapsing, and wholesalers say business is down by half from last year. Consumers don’t have money to spend, yet producers—following Beijing’s mandates—keep making too much. Prices are slashed to clear inventory, profits shrink, wages stagnate, jobs disappear, and spending falls even further. It’s the classic downward spiral of command-and-control economics. Despite officially reported growth fueled by exports, warehouses are filling, housing markets are oversupplied, youth unemployment is soaring, and demographics are rapidly deteriorating. Central planning once again proves it can’t dictate consumer demand—and China is now paying the price.