Finance: The Chinese economy weakened!  Beijing at the forefront

The much-hoped-for economic awakening is turning into a heavy jolt for China. Financial statistics for the first months of 2024 reveal an anemic and unbalanced recovery. Household consumption is stagnating. Real estate is sinking into crisis. Youth unemployment is exploding. Despite the measures taken, Beijing is struggling to sustainably redress the course of its weakened economy.

A recovery that is struggling to take hold

The figures are worrying in China. In January-February, retail sales growth was only 5.5%, a slower pace compared to previous months. Worse, expectations were thwarted. Industrial production, up 7%, is a very meager reason for satisfaction in terms of finance.

Fixed investment, at +4.2%, also disappoints. Particularly worrying, real estate is collapsing with a 9% plunge in investments over one year. An earthquake for this sensitive sector, which has long been the driving force behind the growth of Chinese finance.

As for unemployment, it reaches peaks in urban areas at 5.3%. But it is among young workers aged 16 to 24 that the situation turns into tragedy with a starvation rate of 14.6%. A potentially sacrificed generation.

Beijing at the forefront of finance

Faced with the emergency, the Chinese authorities are on the front lines. Reforms, budgetary stimulus, bond rate cuts, nothing has been neglected to redress the situation. But the financial results are still awaited.

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At the annual parliamentary session in March, ministers had to acknowledge their difficulties. “The pressure on employment remains strong,” admitted Wang Xiaoping, Minister of Human Resources. Ni Hong, in charge of Housing, underlined “the very great difficulty” in stabilizing the estate market.

Even 2024 growth, with a target revised to 5%, now appears to be a major challenge in the government’s own words. An extremely rare admission of impotence on the part of Beijing.

The lungs of Chinese finance are seized up. The recovery is desperately awaited. Contrary to its proactive habits, the regime this time seems somewhat overwhelmed by events.

The coming months promise to be critical for the Chinese economy and finance. After the anticipated euphoria of a post-Covid virile rebound, a cold shower threatens. The pace of recovery currently observed suggests the worst: a relapse into recession. All red signals alert Beijing of the danger. But this time, the usual levers seem to be stuck. Real estate is bogged down, youth unemployment is exploding, household consumption is slowing down. An explosive cocktail with serious repercussions on future growth.

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