Chinese equities have been a major focus for investors in recent months, with catalysts ranging from DeepSeek’s artificial intelligence (AI) advancements to tariffs and trade negotiations.

Inflation’s effects on the economy, monetary policy, and the financial markets are wide-ranging. Higher inflation can constrain economic growth, tighten financial conditions, drive interest rates higher and even restrain stock valuations — higher inflation dampens the present value of future earnings and, historically, correlates with lower stock valuations.