Goldman Sachs Exchanges
Why China’s economy is struggling
Sep 17, 2024
Hui Shan, the Chief China economist at Goldman Sachs Research, provides insights into the current struggles of China’s economy. She discusses the real estate downturn and its impact on consumer spending, painting a picture of shifting economic dynamics. Shan highlights the interplay between the property market and household consumption, warning of ongoing challenges. She also touches on China’s export resilience amid geopolitical tensions and the potential need for fiscal stimulus to bolster growth in a slowing landscape.
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Quick takeaways
- China's economic forecast has been downgraded to around 4.7% due to a significant real estate downturn and slowing consumer spending.
- Despite facing challenges, China's exports have shown resilience, but their sustainability is uncertain amid potential U.S. tariffs and international tensions.
Deep dives
Economic Outlook and Growth Forecasts
China's economic growth is facing significant challenges, leading to downgrades in growth forecasts across multiple institutions. As of now, the growth target of approximately 5% seems increasingly out of reach, with recent projections estimating growth at around 4.7%. Factors contributing to this decline include a real estate downturn, reduced consumer spending, and geopolitical tensions, which have collectively undermined investor confidence and economic stability. The comparisons to earlier this year highlight a stark shift, where initial positive growth indicators have given way to a more pessimistic outlook.
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