China Economy

What makes the world's second largest economy tick
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Background explainers, news and analysis on China’s economy, including its opening up, the US-China trade war, the impact of tariffs and trade talks, growth rates and other key economic data, the Belt and Road Initiative, and Greater Bay Area plan.

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A rally in European and emerging market shares is fuelling speculation that the US’ decade-long stock market dominance is drawing to an end. But whether such a prediction comes to pass depends on how far the US dollar and global energy prices continue to fall.
Growing concerns about the market’s slump have made Times of Negative Property Value, a book on the collapse of Japanese housing prices, a must-read for many Chinese during the Lunar New Year holiday.
The outpouring of concern is simplistic and wrong-headed in many ways: a shrinking population is good for the planet, the fall is merely a rounding error and government efforts to address issues are well under way.
As global demand for meat soars, a large-scale shift towards plant-based and lab-grown meat production will be necessary. Already a leading global supplier of clean energy technology, Asia is well-placed to rise to this new challenge in food sustainability.
The market narrative around China is almost uniformly bullish, but look beneath the surface and the picture is quite different. Investors have yet to put their money where their mouths are as doubts remain over domestic demand, inflation and long-standing structural challenges.
Falling economic and population numbers at a time when country re-emerges from Covid-19 call for healthy moves to restore investors’ confidence.
For the first time in a long while, most of the critical factors needed to turn around Chinese stocks’ fortunes are aligned and changing for the better. Some longer-term challenges remain, but there have been improvements in macroeconomic conditions, government policy and US-China relations.
While many speakers at the latest World Economic Forum meeting detailed the world’s long list of problems, a strain of optimism still emerged. However, given the war in Ukraine, geopolitical tensions, the possibility of recession and more, it’s clear that more hard times lie ahead.
Despite weak GDP growth, many indicators suggest December was the low point for China’s economy and recovery is on the way. The rebound will be largely driven by consumption rather than investment, which means it will be concentrated in consumer sectors, tourism and retail markets.
Just as a full reopening of China’s economy is no panacea for the world’s ills, a soft landing could turn into a harder one if inflation remains a problem. The economic and financial environment remains exceptionally volatile, with investors continuing to be blindsided by shifts in policy.
China’s leadership has announced major policy reversals that have left global investors and others bullish about its economic future. But correcting policy errors is no substitute for the reforms needed to deliver robust growth, including a return to political pragmatism and honest feedback.
Beijing must recognise its failure to earlier adjust the now-abandoned one-child policy and, with an ageing labour force, switch to a consumer and knowledge-based model.
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