Jul 17, 2023, 10:51am EDT
businessEast Asia

What it means: China’s disappointing economic growth figures

REUTERS/Thomas Peter

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The News

China reported slow economic growth and a record-high youth unemployment rate in June, triggering concerns of imminent deflation and the subsequent risks for the globe.

The latest figures, published Monday, show that the world’s second-largest economy is witnessing weakened demand at home and abroad — with exports tumbling, and a prolonged downturn in the property market.

We’ve curated insightful analysis and reporting from experts on China’s worrying GDP figures.

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  • Analysts predict that Beijing will release a stimulus package to combat the slowdown, but some say such measures need to be targeted, rather than broad-based. “Overly stimulating demand in the short-term may prove counterproductive by stoking the build-up in debt and accentuating some of the economy’s imbalances, such as its reliance on a vast housing construction sector,” said Frederic Neumann, HSBC’s chief Asia economist, adding that policymakers should focus on “long-term” sustainability. – Bloomberg
  • While analysts are primarily focusing on China’s weak GDP growth performance, one China economy expert argued that what mattered more was that the quality of GDP growth “seems to be further deteriorating.” Michael Pettis, a Senior Fellow at the Carnegie Endowment tweeted, “China needs better growth far more than it needs more growth.”
  • The most “instructive comparison” for China’s economy today is Japan’s in the 1980s, The Economist argued, when the country experienced extremely slow growth and a shrinking workforce. The problem was partly driven by policymakers being too slow to respond and it wasn’t until 1999 that the Bank of of Japan “cut its benchmark rate to zero; the government directed stimulus towards investment, rather than consumption.” That mistake, which led to “decades of stagnation”, may be made in Beijing.