Chinese Economy : Updates and Discussions

China’s weak GDP growth ‘cannot continue’, Beijing’s economic advisers warn at Caixin Summit​

China “urgently” needs to get its economy back on track to see it grow by at least 5 per cent next year, according to government advisers who appear to be increasingly concerned amid a property market crisis and Beijing’s strict zero-Covid policy.

The world’s second-largest economy has failed to reach its growth potential since Covid-19 took hold nearly three years ago, and “this situation cannot continue”, said Liu Shijin, a member of the Monetary Policy Committee of the People’s Bank of China.

“The urgent priority now is to get the macro economy back on a normal track,” Liu said, speaking on Friday at the 13th Caixin Summit in Beijing. He also warned of how a long-term sluggish economy, under the weight of stringent coronavirus-control measures, can lower market expectations, damage productivity and result in lost economic-growth mechanisms.

As Beijing refines its zero-Covid policy while easing property market curbs – and given this year’s relatively weak economic comparison base – policymakers should aim to achieve a two-year average gross domestic (GDP) growth rate of around 5 per cent for 2022 and 2023, according to Liu, who is also deputy director of the Economic Affairs Committee of the National Committee of the Chinese People’s Political Consultative Conference, the country’s top political advisory body.

Beijing had set a GDP growth goal of “around 5.5 per cent” at the beginning of the year, but most analysts expect it to fall short as China navigates a period of economic transition that is slowing down short-term growth.


Liu said this rocky transition will magnify existing difficulties and risks, driving the economy down a slow and distorted path. Overall growth may even become stagnated, he warned.

A weak economy also hurts China’s labour force, productivity and exchange rate, Liu noted. And even if the economy rebounds when the pandemic is over, some of the losses, including in the supply chain and employment, would be “irreparable”, as strict and uncertain policies have curbed market expectations.
“We have seen some cities that had a short-term rebound after a lockdown or a quiet period, but the growth rate soon dropped again,” Liu said.

According to Liu’s calculations, China’s GDP per capita at this stage is equivalent to the level of Japan in 1975 or Germany in 1971.
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If Beijing wants to fulfil its vow at the 20th party congress to “reach the per capita income level of a medium-developed country by 2035”, Liu said it must keep China’s annual GDP growth rate at no less than 4.7 per cent, taking into account inflation and exchange-rate movements – a “rather difficult” challenge.

Yang Weimin, a senior economic official with the Chinese People’s Political Consultative Conference, also called on Friday for effective steps by the government to address the issue.

“Economic growth this year is not in a reasonable range, and the biggest current risk to economic development is that the growth rate is too low,” Yang said at the summit.

Not keeping its GDP growth within a reasonable range would have significant implications for China’s subsequent development, according to Yang, adding that the trend “must be reversed”.

China’s economy grew by 3.9 per cent in the third quarter, year on year, up from the 0.4 per cent growth in the second quarter.
Economic growth in the first three quarters of the year stood at 3 per cent, missing market expectations.

The International Monetary Fund also cut China’s GDP growth forecast to 3.2 per cent in 2022 and 4.4 per cent in 2023 in its latest World Economic Outlook – a far cry from the 8.1 per cent expansion seen in 2021.
 
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Looks like they are shit scared and trying hard to find reasons :D.
That's fine by us but in the days weeks months & yrs to come they can't rely only on exports. As of now both the US & EU markets are under recession. While the US will improve its economy over time, the switching of energy suppliers will take it's time & toll on the EU. Plus all western companies in China will be following a + 1 model. This may not be India but ASEAN & the rest of the world. The more the US China relations deteriorate the more rapid the shifting of industry from China.

CCP is running out of solution. The present export led paradigm won't last more than 3-4 yrs . What after that?
 
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That's fine by us but in the days weeks months & yrs to come they can't rely only on exports. As of now both the US & EU markets are under recession. While the US will improve its economy over time, the switching of energy suppliers will take it's time & toll on the EU. Plus all western companies in China will be following a + 1 model. This may not be India but ASEAN & the rest of the world. The more the US China relations deteriorate the more rapid the shifting of industry from China.

CCP is running out of solution. The present export led paradigm won't last more than 3-4 yrs . What after that?
It's not about just maintaining the current export level, they need further growth in exports which is next to impossible in the current circumstances (1. global slowdown 2. Friendshoring AKA China +1). So the only way for GDP growth is key building infrastructure and real estate. Both these sectors are already in deep shit and will only result in increasing the bubble size. Basically China is staring at a decade of slow growth/stagnation.
 
It's not about just maintaining the current export level, they need further growth in exports which is next to impossible in the current circumstances (1. global slowdown 2. Friendshoring AKA China +1). So the only way for GDP growth is key building infrastructure and real estate. Both these sectors are already in deep shit and will only result in increasing the bubble size.

Basically China is staring at a decade of slow growth/stagnation.
From 2025-26 onwards, it'd mean chaos if exports fizzle out. Real estate & infrastructure are old tricks now. They can't keep pulling the same old rabbits out of their hats. The more I look at the news coming from China the more I'm convinced all these factors plus whatever we haven't discussed in this forum ( not just this thread) is inevitably leading up to Taiwan & possibly India from 2028 onwards. I'd still stick my neck out for 2030 .
 
From 2025-26 onwards, it'd mean chaos if exports fizzle out. Real estate & infrastructure are old tricks now. They can't keep pulling the same old rabbits out of their hats. The more I look at the news coming from China the more I'm convinced all these factors plus whatever we haven't discussed in this forum ( not just this thread) is inevitably leading up to Taiwan & possibly India from 2028 onwards. I'd still stick my neck out for 2030 .
Exactly. They have been using the same old tricks for far too long. In every domain they have built capacity which the world cannot absorb in long term. Look at their steel production capacity (more than 1000 million tons !!). They tried to deploy these over capacity by selling the BRI concept. Even that has flopped up to large extent. They are staring at anarchy and big time social troubles, like new generation kids not wanting to work and live off their parents money.

My point is they may not have time till 2028. If they wait till then, many of their bubbles would have burst and they can't see the India/Taiwan "Churan" to their public. Either it's now or never. There is a reason for the build up at Tibet.
 
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Exactly. They have been using the same old tricks for far too long. In every domain they have built capacity which the world cannot absorb in long term. Look at their steel production capacity (more than 1000 million tons !!). They tried to deploy these over capacity by selling the BRI concept. Even that has flopped up to large extent. They are staring at anarchy and big time social troubles, like new generation kids not wanting to work and live off their parents money.

Agree.

My point is they may not have time till 2028. If they wait till then, many of their bubbles would have burst and they can't see the India/Taiwan "Churan" to their public. Either it's now or never. There is a reason for the build up at Tibet.

Militarily they're not in a comfortable position to do so today else they'd have undertaken something across the LAC not Taiwan. Plus they still have a few yrs to go before things blow up at home .
 
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