China’s growth under pressure: These are Beijing’s five big concerns in the new year

class = “sc-cffd1e67-0 iQNQmc”>

China’s economy is accelerating again. Growth reached an annual increase of 5.2 percent in the fourth quarter of 2023, the Beijing Statistics Office announced on Wednesday. This means the government’s official growth target has been slightly exceeded.

However, the recovery after the corona epidemic remains fragile. Foreign companies hope Beijing will help the economy and take care of the largest construction sites in the second-largest economy:

The real estate crisis in China continues to affect. Large real estate developers face major debt problems that pose risks to the banking system and the economy in general. Chinese real estate giant Evergrande alone has debts of more than US$300 billion (about 259 billion francs).

In January 2022, the company announced a restructuring plan but has so far failed to reach an agreement with its creditors. The next hearing date is the end of January. Although Beijing has tried to stabilize the market, the outlook remains uncertain.

Many Chinese people are also hesitant to spend money because the value of their apartments has suddenly dropped. This is clearly seen both at the cash register and in large purchases that have been postponed due to current uncertainties.

Consumption is recovering more slowly from the coronavirus outbreak than Chinese economic planners had hoped. Companies in Europe are preparing for the continuation of the impasse.

Due to low demand, consumer prices in China fell 0.3 percent on an annual basis in December. It was already the third month in a row with minus. Economists see this trend as a warning sign that China could fall into long-term deflation.

Deflation is the opposite of inflation and refers to the decrease in the general level of prices. A broad-based price decline occurs when consumers refrain from making purchases with the expectation that prices will continue to fall, negatively affecting companies’ sales, profits and investments.

China has long suffered from a sharp decline in the birth rate and an aging population. However, the effects of the “one child policy” that has been in place for decades are becoming increasingly evident. The population fell for the second consecutive year last year, the Beijing Bureau of Statistics said on Monday.

There are still 9.02 million babies born in China. At the same time, the death toll rose to 11.1 million. The easing of the controversial birth control regime has led to only a slight increase in the number of births since 2016.

Experts see the high costs of housing, education and healthcare in China, as well as the decreasing desire to marry, as the real reasons for the alarming development.

Uncertainties regarding the Chinese economy also arise due to the geopolitical situation. Chinese industry is suffering from the bloc formation between East and West. For example, in the race to develop artificial intelligence, Washington has decided to impose tighter restrictions on chip deliveries to China.

Also, there are elections in the USA this year. Both Republicans and Democrats generally take a particularly harsh stance against China. The situation will be particularly painful for Beijing if Donald Trump moves into the White House again. He triggered a much tougher approach towards China during his time in office. (SDA/wgr)

Source :Blick