China's economic slowdown can be attributed to the impact of the pandemic response, including radical measures and government control over the private sector.
The United States' targeted measures against China, including investment controls and restrictions on sectors like microchips and AI, have significantly impacted China's economy.
Deep dives
Slowdown in China's GDP growth
China's second-quarter GDP growth of 0.8% may be considered disappointing, especially in contrast to the success achieved by some western countries. This slowdown, along with other indicators like high youth unemployment and slowing exports, raises concerns about China's post-pandemic recovery.
Factors contributing to China's slowdown
The slowdown in China's economy can be attributed to various factors. One significant factor is the impact of the pandemic response, including the radical measures taken to control the spread of COVID-19, which temporarily halted economic activity. Additionally, the assertive control exerted by Xi Jinping over the private sector and shifts in Western economic policies towards China, such as investment controls, have further complicated China's economic growth.
Impact of American measures on China's economy
The United States has implemented a series of measures against China, ranging from pursuing specific companies like Huawei to imposing investment controls. These measures have had significant consequences for China's economy. The restrictions on American investment in China, coupled with a decline in foreign direct investment, have had a sizable impact. The targeted measures affecting sectors like microchips and AI are particularly significant, as they disrupt crucial components of the modern Chinese economy.
Structural challenges in China's economy
Beyond the economic war between China and the United States, there are deeper challenges contributing to China's economic slowdown. One core issue lies within the housing sector, where a deliberate effort to control housing construction has disrupted the market. The bursting of the housing bubble, coupled with falling real estate prices and the risk of bankruptcies among major private developers, poses a serious deflationary threat to China's economy. This challenge is compounded by the fact that a significant percentage of household wealth in China is tied to real estate, making the housing sector a fundamental problem that needs to be addressed.
China is facing a crisis in its real estate market that threatens to impact its economy overall. Adam and Cameron explore the broader issues in China accounting for the slowdown.
