What: How fashion companies and consumers in export markets might be affected by China’s weakening markets and possible deflation.

Why it is important: China’s weakening economy can have a significant impact on global markets and businesses.

China's economy is showing warning signs, with a slump in manufacturing output, a real estate crisis, and youth unemployment. The decline in the consumer price index (CPI) in July raised concerns about potential deflation and reduced spending and investment. Weak domestic consumer demand and conservative sentiment persist, with more people increasing savings instead of spending. Pent-up travel demand and inflated travel costs contribute to weakness in spending categories.

The target GDP expansion of 5% is considered sustainable compared to previous debt-fueled growth. Risks include contracted manufacturing activity, a potential default by Country Garden, high levels of provincial debt, and growing concerns in corporate boardrooms. Falling prices in China could impact fashion companies and consumers in export markets.

How worried should fashion be about China’s weakened economy?