China's deflation has begun to take hold.

Deflation is called the "cancer of the economy," and cancer always has a process of worsening.

In November 2025, profits of large-scale industrial enterprises plummeted by 13.1% year-on-year, the largest decline in a year, almost erasing the entire year's growth.

Deflation, also known as the "death spiral," is because it creates a vicious cycle: falling prices -> consumers delay spending -> corporate profits decline -> layoffs and pay cuts -> demand further shrinks -> prices continue to fall, leading the economy into stagnation or even recession, business closures, increased debt burdens, pessimistic social expectations, frozen economic activity, similar to a chronic "suicide."

Beyond economic deflation, China faces another more terrifying "death spiral"—population deflation.

Any country's economy is a "Ponzi scheme," called "Ponzi scheme" in the West. The stock market, bond market, real estate... even government pensions are the same.

The reason Ponzi schemes can sustain is that they require a large influx of new participants. For a society, there must be a large number of new births.

Over the past 20 years, Chinese people have built housing for 2 billion residents, and constructed enough high-speed rail, subways, airports, highways, power plants, as well as schools and kindergartens for 2 billion people to use...

Therefore, China needs 2 billion people to buy houses, 2 billion to consume, 2 billion to pay taxes to maintain the infrastructure built during these years of frantic development, and young people to contribute to social security and elderly care. But what about the people? After population decline, the economy will collapse, government finances will collapse, pensions will collapse, and the healthcare system will also collapse.