Speaking of Cliffs, I see where
Stagnation of growth, demographic decline, real estate and financial sectors in bad shape..
Why is the Chinese economy doing so badly?
Stagnation of growth, demographic decline, real estate and financial sectors in bad shape… The machine is jammed.
The Chinese economy is in disarray.
After decades of insolent growth, and after a post-Covid recovery, all the indicators available show signs of a definite slowdown: the HCI, the Hong Kong stock market index, is down 20% the yuan has hit its lowest level in 16 years from its peak in January, growth is stagnating, exports are at half mast and youth unemployment is at worrying levels, recalls CNN, which wonders why of this mess.
The government's inability to improve the situation worries analysts so much that they are now counting on growth below 5%, barely 2 points more than in 2022, well below what the country had accustomed us to.
Vicious circle
According to Laura He, a CNN journalist based in Hong Kong, several causes explain this slowdown.
First, the real estate crisis: after the failure of real estate giant Evergrande in 2021, this year another major Chinese developer, Country Garden, finds itself in great difficulty.
A new area of turbulence could hurt a weakened economy and a chaotic real estate market.
Because despite the repeated addresses of the authorities to the leaders of the main banks and financial companies of the country to grant more loans and other support to the economy, the demand for credit is running out of steam.
And despite the flexibility of financial institutions, the construction and sale of new homes are not advancing.
This sluggish market is not doing the business for the sector: more than fifty real estate developers are short of money, leaving hundreds of thousands of unfinished apartments that many families, mainly middle class, had already bought by taking out loans, mortgages, reports the New York Times.
These difficulties are not only the lot of real estate: Chinese investment funds, which weigh nearly 2.900 billion dollars, are also struggling to keep up – this is the case of Zhongrong International Trust.
The investment group, which manages $87 billion in funds for businesses and individuals, failed to secure payments to some of its clients to the tune of $19 million, so much so that protesters protested in front of the company's headquarters to demand their due.
Another major problem: the debt of local administrations has exploded with the cost of the various confinements.
The decline in the real estate market has led to a drop in property income related to the sale of land to developers, creating budgetary tensions.
As a result, local governments do not have the means to support growth in an attempt to revive.
Finally, a possible demographic crisis could add to the chaos: the fertility rate continues its steady decline, to reach 1.15 children per woman in 2021, below the 2.1 needed to renew the population.
Thus, for the first time in sixty years, the population declined in 2022, posting a drop of 850,000 inhabitants.
As the country ages, the workforce is likely to become scarcer and health expenditure could increase, straining the budget a little more and increasing the debt.
mediacongo
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