China's economic growth is slowing down as policymakers try to fix a property market downturn, with troubles at major developer Country Garden in focus. Concerns are mounting over whether the world's second-largest economy is coming closer to a crunch point:
in focus. Concerns are mounting over whether the world's second-largest economy is coming closer to a crunch point:Unlike consumers in the West, Chinese people were left largely to fend for themselves during the COVID-19 pandemic and the revenge spending spree that some economists expected after China re-opened never took place.
Given China's debt-fuelled investment in infrastructure and property has peaked and exports are slowing in line with the global economy, China only has one other source of demand to tinker with: household consumption.Whether China bounces back largely depends on whether it can convince households to spend more and save less, and whether they will do so to such an extent that consumer demand compensates for weaknesses elsewhere in the economy.
About 5% is still a much higher growth rate than many other major economies will achieve, but for one that invests roughly 40% of its GDP every year - about twice as much as the United States - economists say it remains a disappointing figure. While policymakers hope lower rates would boost consumption, economists warn the deposit rate cuts accompanying them result in a transfer of funds from consumers who save to those that borrow.from the government sector to households would make a more meaningful long-term impact.
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