China’s troubles may well get worse before they get better

By Roland Rajah and Robert Walker
The Interpreter
September 6, 2023
Category: Finance & Economics
Region: International

China hoped its economy would rebound quickly after the lifting of its draconian zero-Covid policies late last year. But ten months on, China’s economic recovery is sputtering. Growth has slumped, crucial parts of the economy are in bad shape, youth unemployment is rising, and consumer and producer prices have been falling. Lowy Institute research published last year in March already argued that China was likely headed for a sharp growth slowdown as a result of accelerating demographic decline, the limits of its over-investment model, and slowing productivity growth. Those issues relate to the supply side of China’s economy. …China’s problems today however primarily reflect weak demand and the financial risks emanating from its ongoing real estate bust.China’s troubles may well get worse before they get better. Growth in consumer spending is weak while China’s exports – which boomed during the pandemic – are now slowing considerably.

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