The Jingxi Hotel in Beijing is known for its home-made yogurt—and for hosting some of the most important meetings in the history of the Chinese Communist Party. They include the “third plenum” of 1978, which confirmed Deng Xiaoping’s rise to power and the opening of the Chinese economy. The country’s leaders are now gathering for another “third plenum” in this closely guarded venue from July 15th-18th. They should savour their yogurt. Because outside the hotel walls, the economy is turning sour again.
Figures released on the opening day of the meeting showed that the economy grew by 4.7% in the second quarter, compared with a year earlier. The number was both weaker than expected and slower than the previous quarter’s figure, when growth seemed to be stabilising. It puts the government’s official growth target for this year—around 5%—in doubt.
Beneath the headline figure, the data were even worse. Nominal GDP, which makes no adjustment for inflation, again grew more slowly than the price-adjusted figure. The gap implies that prices across the economy continue to fall. In fact, by this measure, China has suffered its fifth quarter of deflation in a row (see chart).