China could face a "vicious loop" of spiralling economic decline as its gross domestic product deflator contracted over two consecutive quarters. The issue has left Beijing's GDP growth lagging behind at just 3.5 percent in the third quarter of 2023 - just over half of the United States's 6.4 GDP growth. Morgan Stanley's top Asia economist Chetan Ahya warned that instances of deflation could wreak considerable havoc. Ahya said: "A deflationary backdrop poses a few challenges. "First, real rates after taking into account deflation will rise, increasing the burden on debtors. Second, even as debt growth slows, it will probably remain…
