Why China’s economy continues Downfall?

china flag

US Finance Minister Janet Yellen mentioned China’s ‘unfair economic activities’ before her Chinese visit! He said he was troubled by the punitive actions taken by China against American companies in recent months.

Let us tell you that recently China said that it will reduce the export of two important things used in the construction of computer chips. At the same time, America had banned some advanced types of chips from being exported to China. Last month, US Secretary of State Antony Blicken also reached China.

Looking at these recent developments, it seems that the enmity between China and America has increased in the field of business. Due to this, signs of increasing trouble in China’s economy have started to appear. America also has its problems. But it is a matter of worry for China because China’s economy is slowing down.

People’s Bank of China cut interest rates twice in June. According to the news published in the Indian Express, economists and analysts say that China’s GDP will decrease in the coming times. Analysts say China’s growth outlook has been reduced from 6% to 5%.

Report of the National Bureau of Statistics of China

Youth unemployment in urban areas: This metric looks at unemployment among people aged 16-24. According to this, unemployment among youth in the age group of 16 to 24 is 3-4 times the level and is increasing rapidly. It was about 21% in May, which means that 1 in 5 Chinese youth are looking for work and have not found it yet.

Growth in industrial production: At the beginning of the year, China’s growth momentum was expected to pick up. It was also necessary for global development in Asian countries. However, this did not happen.

Growth rate of investment in fixed assets: Higher investment in fixed assets shows that companies are expecting growth in future. This is also an indication that people in China are withdrawing from the business sector. Businesses are retreating fast. Investment in fixed assets has increased at the rate of 4% in the year May.

Retail sales growth: Chinese policymakers are trying to transform their economy into one that runs more on domestic consumers, but data suggests China’s consumer growth faltered in May.

Export growth rate: Export growth has been considered a traditional engine for China’s economy, but the data shows that exports have also decreased on many scales. Data shows that the recovery in March and April could not be sustained in May.

The growth rate of imports: Growing economies with strong domestic demand tend to import more. Data from China showed that imports also contracted on several occasions, indicating weak domestic demand.

Manufacturing Purchasing Managers’ Index (PMI): A PMI above 50% indicates that the manufacturing economy is expanding. Indicates shrinkage of less than 50%. It is going negative in China.

According to a report, most analysts believe that the country’s economy needs fiscal stimulus. In other words, the government will either have to spend more or cut taxes to encourage economic activity. But China continues to tamper with the interest rates of taxes again and again.

According to the news agency Xinhua, Minister Li Qiang organized a seminar on the economic situation in this regard on Thursday. He added that “targeted and coordinated policy measures must be introduced and implemented in time to stabilize growth, ensure employment and avert any threat.

Explain that the yuan has fallen to its lowest level in several months. The dollar is getting stronger against the yuan. According to the news published in Reuters, analysts are predicting further weakening of China’s economy.

Yuan (yuan), also known as the renminbi, reached its value of 7.0234 per dollar in May. This happened earlier also in Kovid 19, but China was expecting improvement in the value of the Yuan after Corona but the results are disturbing to China.

According to the news published in Reuters, foreign money has left the Chinese markets, due to which the Chinese currency has fallen by 4% against the dollar since the end of January. According to the news published in Reuters, analysts of Nomura and Societe Generale say that the yuan will soon decline at a rate of 7.3. Keyong Siong, Societe Generale’s chief Asia macro strategist, says that there have been ups and downs in broad monetary policy between China and the US. Because of this, China’s economy has weakened and the yuan is getting weaker.

  • China’s property market: Real estate in China has been deeply affected after Corona. This has severely affected the economy, real estate is a major contributor to the property and other industries in China, accounting for up to a third of China’s gross domestic product (GDP).
  • Climate change: The weather is constantly changing due to climate change, which has a permanent effect on the industries of China. In August 2022, a severe heatwave followed a drought in the southwestern province of Sichuan and the city of Chongqing in the central region.
  • Lack of investors in tech giants: Regulatory action was taken against many tech giants in China. Tencent and Alibaba recently recorded a decline in revenue. Tencent’s profit fell 50%. While Alibaba’s total income halved.

Major automakers like iPhone maker Foxconn and Tesla Factories including manufacturers had to cut hours of electricity. Due to this, there was also a need to keep the factories closed.

China’s Bureau of Statistics said in August 2022 that profits in the iron and steel industry alone were down by 80% in the first seven months of 2022 compared to the same period last year.

Because of this thousands of young workers lost their jobs. Due to this, the crisis of jobs in China has increased. One in five people aged 16 to 24 are unemployed. This could harm China’s productivity and growth in the long run. Its effect is already visible.

Related Posts