China’s economy may experience a prolonged period of slower growth, which could have global implications after decades of rapid expansion and globalization. The Chinese government is implementing measures to boost the economy, with a key Politburo meeting scheduled to review the country’s first-half performance. In the second quarter, Chinese gross domestic product grew by 6.3% year-on-year, below expectations. Quarterly economic output also slowed compared to the previous quarter. Youth unemployment reached a record high in June, but industrial production growth exceeded expectations. The ruling Chinese Communist Party has set a growth target of 5% for 2023, lower than usual given the country’s historical GDP growth. Authorities have announced pledges to specific sectors and to reassure investors, but major details are lacking. The recent Politburo meeting highlighted the challenges facing the economy and the need to expand domestic demand. While further policy support is expected in the coming months, the lack of urgency and specific measures is concerning for the near-term outlook. The Chinese economy is currently facing the “triple shock” of the Covid-19 pandemic, a struggling property sector, and regulatory shifts. Without appropriate policy responses, these challenges could lead to a much slower growth rate. TS Lombard predicts a stabilization of the Chinese economy in late 2023 but anticipates a longer-term structural slowdown. This could lead to less investment from the West and a shift away from the reliance on the property sector. The recalibration of the economy toward advanced manufacturing, particularly in electric vehicles, will have repercussions for commodities and the global industrial cycle. China’s transition to this new economic model will bring second-order impacts, such as increased global competition in advanced manufactured goods. The country is at a pivotal point, as the political economy changes and a new version of the Chinese economy emerges with new drivers and idiosyncrasies.
The Implications of Slower Chinese Growth as the New Norm on the Global Economy
Denial of responsibility! Swift Telecast is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – swifttelecast.com. The content will be deleted within 24 hours.