Can China Fight Deflation and Trump’s Tariffs at the Same Time?

Dozens of delivery drivers in yellow and blue uniforms crowded around a snack street in downtown Shanghai, on standby for their next order. The work was temporary, many said, a gig to help pay off a debt or fill the gap before a better paying job.

For China’s workers, financial security is further out of reach than ever. They are stuck in China’s deflation loop. Stubbornly low prices on everything from eggs to a hot delivered meal have cut into the profits that businesses make, gnawing at the money workers earn. Everyone has become tighter with money, pushing down prices even more.

A bruising trade fight with the United States is the last thing anyone wanted, especially policymakers who have floundered to stop prices falling. It threatens to make things harder than they already were for China’s hundreds of millions of workers.

Cao Zhi, 27, left his low-paying job selling car insurance to join the food delivery platform Ele.me four years ago in Shanghai. He said he has to work at least one extra hour each day to take home the same amount of pay that he was making when he started.

He said many of his friends have experienced a similar earnings erosion.

“I feel that it is universal,” said Mr. Cao, who is trying to pay off a car loan he owes in his hometown in the central province of Shanxi.

The Chinese government has for several years been dealing with deflation, the pernicious side effect of a property crisis crawling through the economy and putting a freeze on much economic activity. The big exception has been in manufacturing, where factories are making far more than Chinese consumers can buy. Those goods, including electronics and clothes, are sent overseas to countries like the United States. Exports accounted for nearly a third of China’s economic growth last year.