When Xi Jinping came to his third term, he declared China’s ambition to share the governance of the entire world with the United States. But it seems that Russia has put a serious stumbling block in his way.
This was written by Antoliy Amelin, co-founder and director of economic programs at the Ukrainian Institute for the Future, in his column on 24tv.ua .
The war in Ukraine:
- worsened China’s relations with its main trading partners;
- worsened logistics (at least to Europe);
- intensified the trade war with the United States (the number of restrictions on exports to China – primarily technological products – is growing);
- highlighted a possible future military conflict over Taiwan;
- turns investors away from China.
Below are some negative facts about the situation in China.
The Chinese economy is slowly falling
1. China’s economic growth is rapidly declining (and this is according to official statistics, the quality of which is questionable):
- 2023 – 5,2%;
- 2024 – 4,6%;
- 2025 – 3,4%.
2. China’s debt-to-GDP ratio will rise to a record 287.8% in 2023.
3. China’s stock market is facing serious problems. It fell by 13% in 2023 and continued its decline in 2024 amid relentless overseas sales, a deepening real estate crisis, and a shaky economic recovery.
China is suspending short-sale lending for some stocks to support the country’s falling stock markets. Strategic investors will not be allowed to borrow shares during agreed lock-up periods, the Shanghai and Shenzhen stock exchanges said in separate releases following a statement by the China Securities Regulatory Commission.
Chinese regulators are asking funds to limit short selling of stock index futures.
Three-quarters of the foreign money invested in China’s stock market in 2023 left the country this year. Net inflows of equity investments are at an 8-year low.
As a result, the Chinese government is considering a $278 billion package of measures to rescue the stock market. Previous attempts by the authorities to restore investor confidence have failed and the Chinese Prime Minister is calling for decisive action.
4. The construction market, which accounts for 30% of the Chinese economy, is deflating. The bubble of residential and commercial real estate in China has deflated by one and a half times (in terms of sales) over the past 3 years. 2024 will also remain a bad year for the sector.
It is an open question where the Chinese will transfer the 7 trillion yuan (about $1 trillion) saved due to the market decline – will they use it for consumption or put it on deposits?
According to the
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5 For the first time since 2006, China did not become the largest exporter to the United States in 2023. China’s share of U.S. imports fell from 21% in 2017 to 14% today. The share of Mexico, the largest exporter to the United States in 2023, was 15%. Canada is likely to overtake China in exports to the US next year.
6. Exports from China are also falling. In 2023, it amounted to $3.38 trillion, down 4.6% from a year earlier. Exports fell for the first time since 2016, as global demand for Chinese-made goods (other than cars) slowed. Chinese officials have already said that in 2024, the recession will be difficult to overcome.
7. New foreign direct investment in China fell last year to its lowest level in 3 years. According to data released by the Ministry of Commerce, in 2023 they amounted to 1.1 trillion yuan ($153 billion). This was 8% lower than in 2022, which was the highest dec line in the history of observations on comparable data for 2014.
Interestingly, the ministry declared last year the “year of investment in China” and presented 24 specific reforms for this purpose.
8. Consumer price inflation in 2023 was the weakest in 14 years. Goldman Sachs said that the persistently low core CPI inflation reflects lower domestic demand due to the decline in the real estate market and labor market stress.
9. The producer price index fell by 2.7% in December compared to the same period in 2022, falling for the 15th consecutive month. in 2023, the producer price index fell by 0.3%. This is a clear sign of a decline in business activity.
10. China’s enterprise index continues to fall. The CSI 1000 is one of the broadest indices of the Chinese equity market and is used to gauge the overall investment activity and direction of China.
11. China is experiencing negative population growth. In 2023, 9 million children were born in China, a record low in the country’s history since 1949. In 2023, China’s population decreased by 2 million people, and further decline is likely: the fertility rate (the number of children a woman has in her lifetime) fell to a record low of 1.0.
12. Moody’s changed its outlook on China’s debt to negative in December 2023.
13. China suspends data collection on youth unemployment after record high. In June, the unemployment rate among young people aged 16 to 24 in urban areas of China reached a record high, exceeding 20%. Official data showed that the overall unemployment rate in China rose to 5.3% in July 2023.
14. And the funniest thing is that Chinese bloggers are asked not to criticize the country’s economy.
So, China is facing difficult times ahead, and the crazy dwarf neighbor has a hand in it. According to my information, China is putting pressure on Russia to freeze the conflict. We will see soon whether this is true or not. In the meantime, we are watching a huge wardrobe slowly begin to fall.