New state economic data released Thursday shows that China is facing headwinds in its effort to revive its struggling economy, according to The Wall Street Journal.
China struggled in August with low manufacturing activity, exports and consumer spending, adding more negative factors to the Chinese economy, which is already facing a fumbling real estate market, according to the WSJ. The new data from China follows disappointing economic growth for the country in the second quarter of 2023, with the Chinese economy only growing 0.8% for the quarter as opposed to 2.2% in the first, totaling 6.3% for the year.
China’s manufacturing activity shrank for the sixth consecutive month in August and activity slowed in the services sector, signaling that consumers are reluctant to spend, according to the WSJ. Sales from the top real estate developers fell by 34% year-over-year.
The data signals that the country’s economy is moving away from greater real estate investment and towards consumption-based growth, with the economic troubles leading some economists to think that China is moving into an era of slower growth, according to the WSJ.
WSJ: “China’s 40 year boom is over”
The Chinese people are losing faith in their government as the economy hits the skids. The yuan just hit a 16-year low, and Chinese stocks have gone nowhere for close to two decades.
China was supposed to pass the US, instead it’s fallen to… pic.twitter.com/yzeGtSq3gM
— Peter St Onge, Ph.D. (@profstonge) August 30, 2023
China is currently undergoing a real estate crisis, and companies accounting for 40% of Chinese home sales have defaulted on their debt since 2021. Major Chinese developer Evergrande Groupe announced earlier this month that it would be going to U.S. bankruptcy court to restructure its $340 billion in debt in order to avoid defaulting on foreign bondholders.
The measures from China are among others designed to address the country’s economic struggles, with China halving stock-trading stamp duties for the first time since 2008 and approving guidelines to improve access to first-home mortgages, according to Reuters. Chinese securities regulators revealed on Aug. 18 a cut in trading costs, support for share buybacks and encouragement for long-term investment in an effort to address the country’s declining stock market.
Large banks are preparing to cut interest rates on current mortgages following the troubling economic data, while some big cities are saying they will relax restrictions on home purchases, according to the WSJ.
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