China’s Economic Crisis
By: Oscar Orellana '24
The COVID-19 pandemic has had a longer lasting impact on China than any other country that it affected. China’s economy is close to a complete recession as a consequence of the “zero-COVID” lockdowns that took place earlier this decade, as stated by Vincent Ni of NPR News. Ni also stated that, “Retail sales, industrial output and investment in July all grew at a slower-than expected pace.” This is all after economic analysts had predicted the economy to stabilize this year after the pandemic.
A big issue going on in China’s economy currently that is worsening it heavily is the situation of the housing market. Real estate in China is spiraling with each passing month. This is mainly at the fault of Country Garden, one of China’s leading property developers, missing payments to their investors in the last few weeks, as stated by Laura He of CNN Business. This housing situation affects the whole economy, as seen in Julian Evans-Pritchard’s quote, “Further losses in the property sector risk spilling over into wider financial instability.” Evans-Pritchard serves as the head of China economics at Capital Economics, a research-based institution in London.
Other factors that have alarmed China’s leaders include the changes to their demographic. China is currently experiencing a massive drop off in fertility rates, going from 1.30 last year to 1.09 this year, as stated by He. This drop off in fertility rate has driven China’s first population decline in 60 years, which affects much more than just the amount of people. With less people, there will be a decline in labor supply, increased social spending, higher debt, and housing demand will fall. Overall, China’s economy will continue to struggle even further down the line with these massive changes in their demographic.
China’s economic crisis also affects the global trading scene. However, it will not negatively affect other countries like it would be assumed to do so. In TIME Magazine’s article titled, “China’s Worsening Economic Slowdown is Rippling Across the Globe”, it is stated that, “China’s slowdown will drag down global oil prices, and deflation in the country means the prices of goods being shipped around the world are falling.” This development favors countries involved in a lot of trade with China such as the US and the UK.
China is also going through a horrible period of unemployment, with numbers getting so bad that the Chinese government has refrained from publishing the data in the last pair of months. Overall, China’s economic crisis has developed from numerous factors but affects even more areas around the world. The Chinese government will need to act quickly in order to prevent the housing crisis from losing the faith of its citizens and those around the world.
