12/09/2023
China's economic growth is currently declining, with concerning indicators like record-high youth unemployment, a worsening real estate crisis, declining exports, and imports, alongside deflationary pressures and weak consumer spending.
While short-term stimulus measures might help, uncertainty surrounds China's appetite for fiscal stimulus due to high municipal debt. Furthermore, China's slowdown isn't just a short-term issue; it's rooted in structural challenges, including mounting debt, changing demographics, and weak domestic demand, which will contribute to a medium-term decline in trend growth.
As the world's second-largest economy, China's prolonged slowdown will impact the global economy, especially countries relying heavily on China as their primary export market (as shown in the image below). Policymakers in these nations are preparing for the economic repercussions as China's imports slow down.
