HONG KONG : China's economic growth is slowing down as policymakers try to fix a property market downturn, with troubles at major developer Country Garden in focus. Concerns are mounting over whether the world's second-largest economy is coming closer to a crunch point:WHAT IS CAUSING CHINA’S ECONOMIC S
HONG KONG : China's economic growth is slowing down as policymakers try to fix a property market downturn, with troubles at major developer Country Garden in focus. Concerns are mounting over whether the world's second-largest economy is coming closer to a crunch point:Unlike consumers in the West, Chinese people were left largely to fend for themselves during the COVID-19 pandemic and the revenge spending spree that some economists expected after China re-opened never took place.
But the infrastructure upgrades have created too much debt, and the property bubble has burst, posing risks to financial stability today. The imbalance between consumption and investment is deeper than Japan's before it entered its"lost decade" of stagnation in the 1990s.Weak data readings have prompted some economists to flag the risk that China may struggle to meet its economic growth target of about 5 per cent for 2023 without more government spending.
Stress in the property market, which accounts for about a quarter of economic activity, raises further concern about the ability of policymakers to arrest the slide in growth. While policymakers hope lower rates would boost consumption, economists warn the deposit rate cuts accompanying them result in a transfer of funds from consumers who save to those that borrow. Transfers of resources from the government sector to households would make a more meaningful long-term impact.
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