While US companies are fighting inflation, the Chinese people are opposed to something very different: deflation.
As Chinese consumers and businesses cut back on travel, banquets and events, Beijing’s high-end Beijing hotel’s Beijing grand has set up food stalls in the evening to serve food to passersby. The chef’s king cooks specialized fried pigeons there on the sidewalk rather than on the hotel restaurant.
“When we sold fried pigeons inside the hotel restaurant, we only sold 60-70 a day,” Wang said. “We’re selling about 200 right now.”
However, these sales reduce prices.
Previously, it cost $8 for each fried pigeon. Today they’re going for $5.30.
The woman rides an electric scooter at a Beijing Grand Hotel in Beijing, China on August 11, 2025.
Maxim Shemetov | Reuters
A fall in prices is a problem in China’s overall economy. It happens when consumers are uncertain about the future seeking value.
On his way home from work, Wangian picked up a gourmet dinner of duck necks, duck wings and steamed bread from Beijing for just over four dollars.
“The economy is not going well,” he said. “The food is very clean and the quality is good.”
Another factor that puts pressure on China’s prices is the excess capacity of everything from electric vehicles and solar panels to food delivery services, leading to what is described in China as a “retreat” or a competition to bottoms.
Food delivery is one of the most intensely competitive battlefields. Market leader Meituan faces Cutthroat competition from Alibaba and JD.com. They all offer coupon discounts to fight for a business that lowers prices.
The Chinese government is worried about deflation going to take hold and is intervening with warnings and revised regulations to manage pricing.
The country will post consumer price index and producer price index data for August on Wednesday. Goldman Sachs predicts that wholesale price inflation will remain “deeply negative,” with producer price indexes falling 2.9% year-on-year. Banks view the consumer price index as “moderately negative” and have fallen 0.2% from a year ago.
In a deflationary environment, consumer patterns are changing.
Used luxury items are in great demand, and online vintage products seller Zhuanzhuan opened a physical superstore in downtown Beijing this summer.
For wealthy Chinese consumers like Hao Wenli, not buying new things was once socially unacceptable.
It no longer has a stigma.
“We rarely go to luxury shops anymore,” she said. “I’m currently struggling to make money, so why not shop in places like this to save me?”
