Big Take Xi’s Big Challenge Is Getting People to Spend, Spend, Spend
Mar 7, 2025
John Liu, Bloomberg's senior executive editor for Greater China, provides insightful analysis on the pressing challenges facing China today. He discusses the ambitious 5% GDP growth goal amidst a crippling property crisis and weak consumer demand. Liu highlights how Xi Jinping's strategies to boost spending through public initiatives clash with the reality of high youth unemployment and external trade tensions, particularly with Trump's tariffs. Liu's expert perspective offers a deep dive into navigating a complex economic landscape.
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China's Growth Target and Spending
- China set a 5% GDP growth target for 2025, the same as 2024, despite economic headwinds.
- Reaching this target requires increased spending, reflected in the highest budget deficit since 1994.
China's Consumption Crisis
- Consumption in China is weak, making up less than 45% of GDP growth in 2024, the lowest since 2006.
- This low consumption leads to price cuts, lower company profits, and further reduced household spending, creating a dangerous cycle.
Local Government Debt Crisis
- Local governments in China face high debt due to infrastructure spending, impacting their ability to generate revenue and provide services.
- The central government plans to address this by taking on local government debt.