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Special Report

China: Will Anti-Involution Reverse Deflation?

by Arthur Budaghyan, Chief EM/China Strategist   Ziyuan Huang, Senior Analyst  

China's anti-involution policies will not end deflation or boost corporate profits on a sustainable basis. Authorities will be reluctant to cut industrial capacity as doing so would lead to layoffs. Consequently, production will continue to exceed demand, and price deflation will persist.

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