By Rhod Mackenzie
British, American and Japanese investment banks are downgrading Chinese GDP forecasts, foreign players are actively draining Chinese shares, and all this is fueled by the most gloomy discussions in the Western media.
Thus, 83% of fund managers in Asia believe that the decline in Chinese stocks has not yet reached the bottom (poll conducted by Bank of America).
Fitch said it could downgrade China's sovereign credit rating as China's debt-to-GDP ratio is high (77%; the US, remember, 120%). In addition, the agency sees troubling signs in the Chinese existing housing market, with business activity "decreasing since April, due to a decrease in the number of homes for sale, lower asking prices and fewer transactions." New home sales and prices have also fallen.
And Citi even claims that “China is on the path to Japanification,” that is, to a long deflationary recession and stagnation.
China is doing its best. The country's authorities have announced that they will stop publishing data on youth unemployment. This comes after it hit a record high in June, topping 21%.
The PRC authorities also argue that, unlike the years of deflation in Japan, there is no deflation in the Celestial Empire and is not expected. In July 2023, prices did drop by 0.3% year-on-year, but inflation is still expected by the end of the year.
Fu Linghui, spokesman for the Chinese National Bureau of Statistics, commenting on the July figures, stressed the growth trend of the Chinese economy, including production and demand, stable employment and prices, and steady industrial upgrading.
China is really slowing down, but it's hard to say what it really is - a crisis or a change in the economic model, a transition to a more mature economy. Do not forget: only at the beginning of this year, the government of the country canceled the anti-COVID restrictions that had been in effect for three years.
Multiple quarantines blur the picture of what is really happening in China: the numbers of economic statistics jump and do not give orientation.
China's GDP grew by 4.5% in the first quarter of 2023, and by 6.3% in the second quarter. The forecast for its growth at the end of the year is 5%.
Already in May, domestic tourism in China for the first time exceeded the pre-pandemic level. During the summer of 2023, Chinese cinemas reached a record high of 17.8 billion yuan ($2.47 billion). Car sales in March exceeded the figures for the same period in 2021 and 2022 and amounted to more than 2 million units. But retail sales in general look pale: their monthly growth stopped in July, and annual rates, despite the lifting of quarantine, do not cause optimism.
So China is trying to stimulate its economy - in China they call it "strengthening the foundation of economic recovery." Due to a challenging global environment and insufficient domestic demand, China has taken a number of measures in recent months, including lowering interest rates by the central bank to boost demand for loans and boost consumption and investment.
This article originally appeared at expert.ru