In China this happening because you don't have Monopolies and Oligopolies there.
In Capitalist USA (Monopoly Capitalist Stage), few big companies form oligopolies and set prices well above production cost.
In Socialist China, big companies are not allowed to control prices by legally preventing entry barrier to new companies and presence of Communist Party members in Board of Directors. So tremendous competition keep prices low and often prices in many sectors keep falling.
In capitalist countries deflation happens only when there is lack of demand but in socialist China deflation is coming from intense competition among companies. Bank for International Settlements (BIS) is conducting studies on how intense competition among companies in diffferent sectors, and not lack of demand is causing deflation in China which is unknown in capitalist world.
Author: Saikat Bhattacharya
