Although there are optimistic expectations for recovery, the Chinese economy continues to face significant challenges, which worries economists around the world.
Experts' Perplexity
Economists have continued to bet on China's economic crisis; however, they have been surprised by the Asian giant's disillusionment and the revelation of the reason behind it.
Indeed, the slowdown in economic growth, volatility in the markets financial and political uncertainties are factors that contribute to the persistence of the crisis in the world's second largest economy.
- First, China’s growth slowdown has been dragging on for years and will hit its lowest pace in three decades in 2023. This is due to a number of factors, including the trade war with the United States, the slowdown in the global economy and the aging of the Chinese population;
- Second, volatility in China’s financial markets has also been a significant problem. In 2023, China’s stock market was one of the worst performers in the world, with sharp declines across a range of sectors;
- Finally, political uncertainties have also contributed to the crisis. The Chinese government is facing a number of challenges, including growing popular dissatisfaction with its “zero COVID” policy and tensions with Taiwan.
Reasons and impacts of Chinese Disillusionment
China recently revealed that its disillusionment stems largely from pressures on its technology sector and a slowdown in international trade.
Regulatory restrictions imposed by the Chinese government on the technology sector have negatively affected local companies, reducing their capacity for innovation and growth.
Furthermore, the ongoing trade dispute between the United States and China has caused uncertainty in the markets, harming Chinese exports and negatively impacting the country's trade balance.
Future Perspectives and the need for structural reforms
Despite the current challenges, there are expectations that China will take measures to boost its economy and address the obstacles that are preventing its full recovery.
Experts emphasize the importance of structural reforms to strengthen the financial system, promote technological innovation and stimulate domestic consumption, aiming to boost economic growth in a sustainable way.
Given this scenario, the Chinese government's next steps will be crucial in determining the direction of the country's economy and its impact on global markets.
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