Great analysis. I think you're right about the push to stop price wars, but the reality of fiscal deficits is also a huge factor. China is effectively raising taxes broadly this year simply because the government is short on cash. It raises an interesting question: Can removing fiscal support actually help solve a deflationary cycle? It will be interesting to watch.
I agree that in the long run, fixing the rules is good. But my worry is the timing. Tightening the rules right now acts like a tax hike. If the government takes more money out of companies while the economy is already cold, businesses will just cut jobs to survive. It’s like performing surgery on a patient who is already weak—without giving them any blood support (stimulus) to help recover.
Great analysis. I think you're right about the push to stop price wars, but the reality of fiscal deficits is also a huge factor. China is effectively raising taxes broadly this year simply because the government is short on cash. It raises an interesting question: Can removing fiscal support actually help solve a deflationary cycle? It will be interesting to watch.
Raising taxes may lead to differences in interpretation, but in essence, it also serves to rectify institutional deficiencies.
I agree that in the long run, fixing the rules is good. But my worry is the timing. Tightening the rules right now acts like a tax hike. If the government takes more money out of companies while the economy is already cold, businesses will just cut jobs to survive. It’s like performing surgery on a patient who is already weak—without giving them any blood support (stimulus) to help recover.
Welcome back, and I wish you a smooth journey!