China's deflation has truly begun to show its power.

Deflation is not just short-term data fluctuation,
it's called the "economic cancer," and there is definitely a process of deterioration from latent to out of control.
In November 2025,
profits of industrial enterprises above designated size plummeted by 13.1% year-on-year,
marking the largest decline in a year,
almost wiping out all annual growth.
This is not "adjustment,"
it's a signal of profit collapse.

1. Why is deflation called the "death spiral"?
Because it is not a one-time shock, but a chain that cannot be self-rescued:
Falling prices
→ Consumers delay spending
→ Corporate profits decline
→ Layoffs, salary cuts, reduced investments
→ Demand further shrinks
→ Prices continue to fall
Once this cycle forms,
the economy will not "recover slowly,"
but suffer chronic suffocation.
Business closures, mounting debt pressures, negative expectations,
the entire society enters a state—
Money is there, but afraid to spend;
Projects exist, but no one is working on them;
The future is there, but no one believes.
This is the most terrifying part of deflation.

2. But more deadly than economic deflation is population deflation
If deflation is cancer,
then population deflation is organ failure.
Any country's economy is essentially a **"Ponzi structure"**.
Western countries directly call it Ponzi Scheme.
Stock markets, bond markets, real estate, pension systems, healthcare systems,
all rely on one premise:

There must be a continuous influx of new people.

The problem in China is—
this "new influx" is disappearing.

3. Over the past 20 years, China has been built on a "population of 2 billion"
This is not an exaggeration.
In the past two decades:

Housing was built for 2 billion people

High-speed rail, subways, airports, highways, power plants
built according to the usage intensity of 2 billion people

Schools, kindergartens, hospitals
allocated based on continuous population expansion

This system itself is not a problem,
the premise is continuous population growth.
But the reality is—
the population is beginning to shrink, and it is a structural, irreversible decline.

4. After population deflation, it’s not just an industry that collapses,
but an entire set of accounts.
Without enough people:

Who will buy houses?

Who will consume?

Who will pay taxes?

Who will contribute to social security and support retirees?

Who will maintain these huge existing assets?

When the population declines,
the economy is not "slow growth,"
but a breakdown of underlying cash flow.
The final result is not a problem in a specific industry, but:


Local governments face tight finances

Social security system under pressure

Healthcare system imbalance

Long-term debt unsustainable

5. The conclusion is only one sentence
Deflation is not scary; population deflation + deflation is the real death spiral.
This is not an emotional judgment,
it's a mathematical problem.
Economies can rely on stimulus to last for a while,
but once the demographic structure reverses,
all "bailing out" will turn into delaying.
The real question is not:
"Can we still grow?"
but:
"How can we grow?"
Who else can support this system?
This question has just begun to be brought to the forefront.