{"id":2020040,"date":"2023-09-02T04:18:02","date_gmt":"2023-09-02T08:18:02","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/the-boom-is-over-chinas-economy-grapples-with-structural-problems-debt-mountain\/"},"modified":"2023-09-02T04:26:06","modified_gmt":"2023-09-02T08:26:06","slug":"the-boom-is-over-chinas-economy-grapples-with-structural-problems-debt-mountain","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/the-boom-is-over-chinas-economy-grapples-with-structural-problems-debt-mountain\/","title":{"rendered":"China&#8217;s economy faces structural issues and a massive debt burden as the boom comes to an end."},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">34<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fthe-boom-is-over-chinas-economy-grapples-with-structural-problems-debt-mountain%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2020040&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><h2>Is the &#8220;Chinese Miracle&#8221; Fading to Black?<\/h2>\n<p>The world&#8217;s second-largest economy is grappling\u200b with \u200da plethora \u200cof different challenges. The country is facing below-trend economic growth, a plummeting currency, rising youth \u200cunemployment, shrinking manufacturing activity, and a \u200dproperty sector seeped in financial problems.<\/p>\n<p>China is wrestling with &#8220;huge structural problems&#8221; that threaten the overall <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/breaking-wyoming-announces-end-to-lockdown-lifts-mask-mandate\/\" title=\"BREAKING: Wyoming Announces End To Lockdown, Lifts Mask Mandate\">economy moving forward<\/a>, \u200csays Nicholas Lardy, the non<a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/derrick-hollie-bidens-spec-employees-make-sure-your-energy-costs-remain-high\/\" title=\"Derrick Hollie: Biden\u2019s SPEC Employees Make Sure Your Energy Costs Remain High\">-resident senior fellow<\/a> at the Peterson Institute for International Economics (PIIE), adding that Beijing will unlikely see growth\u200b rates of 8 or 9 percent \u200cagain.<\/p>\n<p>&#8220;The boom is over,&#8221;\u2063 Mr. Lardy said.<\/p>\n<blockquote>\n<h3>Related Stories<\/h3>\n<ul>\n<li><a href=\"http:\/\/www.theepochtimes.com\/opinion\/china-financial-contagion-what-it-means-for-the-world-5484612\">China Financial Contagion: \u2064What It Means \u2062for the World<\/a> &#8211; 9\/1\/2023<\/li>\n<li><a href=\"http:\/\/www.theepochtimes.com\/opinion\/chinas-economy-is-struggling-still-want-to-emulate-it-5484362\">China\u2019s Economy Is Struggling\u2014Still Want to Emulate It?<\/a> &#8211; 8\/31\/2023<\/li>\n<\/ul>\n<\/blockquote>\n<p>Last \u2063year, the Chinese economy reported an \u200dannual \u2064growth rate of 3 percent.\u2062 In 2021 and \u200c2020, it was 8.4 percent \u200cand 2.2 percent, respectively. Since growing more than 14 percent in 2007, GDP\u2064 growth has been \u200con a <a href=\"https:\/\/data.worldbank.org\/indicator\/NY.GDP.MKTP.KD.ZG?locations=CN\" target=\"_blank\" rel=\"noopener\">downward trajectory<\/a>.<\/p>\n<p>But while \u200dsome assert\u200d that Beijing is spiraling downward to 2 percent expansion amid various problems throughout the country, Mr. Lardy asserts that he does\u200d not\u200c see this \u200cin the data he is watching.<\/p>\n<p>&#8220;I do think that \u200btheir \u2064growth over the next few years is likely to be significantly higher in the \u200c3 percent,&#8221; \u200che said during an \u200conline Center for Strategic and\u200c International Studies (CSIS) event. \u200c&#8221;I certainly think there are\u200d a\u200b lot of \u200cstructural problems. There are a number of threats. But I \u2063don&#8217;t\u200c think they&#8217;re \u2064going south here.&#8221;<\/p>\n<p>Despite abandoning\u200d most of the pandemic-era COVID Zero public \u200dhealth \u200brestrictions and\u200c reopening the\u2062 economy, economists\u2019\u2062 expectations\u200b of a \u200dsubstantial boom never materialized. Consumer demand has been\u2062 anemic, resulting in a \u200ddeflationary climate in July. Exports \u2063have\u2062 cratered amid below-trend demand \u2063from key\u2063 trading \u200bpartners that are facing stubbornly high\u200d inflation and slowing growth. The effects of \u200dthe\u2064 collapse in the <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/chinese-buyers-back-making-us-home-purchases-after-beijing-ends-lockdowns\/\" title=\"Chinese buyers are resuming US home purchases as Beijing lifts lockdowns.\">real estate\u200c market<\/a>, which accounts for approximately two-thirds of Chinese household wealth, are spilling into the broader economy.<\/p>\n<p>All of this has\u200b prompted the Chinese government and the People\u2019s Bank of China (PBOC) to unleash <a href=\"https:\/\/www.theepochtimes.com\/china\/chinas-manufacturing-activity-shrinks-fifth-straight-month-5483886\" target=\"_blank\" rel=\"noopener\">multiple stimulus efforts<\/a> in recent months, from lowering key interest rates to cutting taxes on stock trades. A \u200bchorus of market\u2063 analysts argue that Beijing needs to fire off \u2064bazooka-like stimulus to resuscitate the economic landscape.<\/p>\n<p>&#8220;Some markets are bracing for the sort of bazooka stimulus response that\u200d we have seen at times in the recent past when \u200dChina has been struggling economically. But we are\u200d not at all \u2062sure we will \u200csee\u200d that this time,&#8221; stated Robert Carnell, the regional\u200b head of research, Asia-Pacific, at ING, in a <a href=\"https:\/\/think.ing.com\/articles\/were-worried-about-china-but-things-could-be-worse\/\" target=\"_blank\" rel=\"noopener\">note<\/a>.<\/p>\n<p>But the paucity of a hefty response \u201cpoints to a worrying degree\u200c of policy \u200cparalysis,\u201d \u2064says\u2063 Julian Evans-Pritchard, the head of \u2062China economics at Capital Economics, in\u200c a <a href=\"https:\/\/www.capitaleconomics.com\/publications\/china-economics-update\/policy-paralysis-has-dented-near-term-outlook\" target=\"_blank\" rel=\"noopener\">report<\/a>. Without a significant stimulus response, \u201cthe \u2063downturn \u2062could persist for\u200b a while \u2064longer,\u201d \u2063noted Mr. Evans-Pritchard.<\/p>\n<p>\u201cWe now expect q\/q growth of just 3.0% annualised over\u200c the rest of the year,\u201d he wrote. \u200b\u201cThis rests \u200bon the assumption that\u2062 policymakers \u2062will eventually intervene more forcefully.\u200b But even then, \u200cany\u2063 economic reacceleration is likely to be modest\u2063 given the structural decline\u200d in trend growth.\u201d<\/p>\n<p>Economists present the case \u200cthat officials are tolerating weaker economic growth and refraining from putting the pedal\u2064 to the metal due to the enormous \u2062amount of debt facing all levels of government.<\/p>\n<h2>China\u2019s Debt Mountain<\/h2>\n<p>The debt-laden Chinese\u200b property titans, Country Garden and Evergrande Group, have captured all the \u200bmedia\u200c attention. But governments are also dealing with this \u200dreality of hefty red ink. And, Jude Blanchette, the Freeman Chair\u200b in China Studies, told the CSIS event that these debt issues establish \u200ba &#8220;ceiling\u2063 for growth.&#8221;<\/p>\n<p>Federal debt has \u2062skyrocketed since 2011 \u2062as officials have tried to prevent the sinking of the Titanic\u2064 during\u200d various economic \u2064events, including the 2008-09 global\u200b financial crisis and\u2062 the 2015 property sector decline. It is estimated that the national \u200ddebt\u2064 is north of $14 trillion, up 36 percent from 2022, and represents about 250 percent of GDP. \u2062This is higher than the U.S. but lower than Japan.<\/p>\n<div>\n<figure style=\"width:600px\" class=\"alignnone\"><figcaption>The company logo\u200c on the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China, on Sept. 26, 2021. (Aly Song\/Reuters)<\/figcaption><\/figure>\n<\/div>\n<p>The chief concern among economists is that this\u2063 trend\u200c could result\u2063 in a financial crisis or a <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/the-boom-is-over-chinas-economy-grapples-with-structural-problems-debt-mountain\/\" title=\"China's economy faces structural issues and a massive debt burden as the boom comes to an end.\">prolonged economic slump comparable<\/a> to Japan&#8217;s Lost Decade \u2062of the 1990s.<\/p>\n<p>But it is not only the central government that is observing mountainous debt levels. \u2063Local governments\u2013provincial and municipal\u2013are seeing immense debt volumes, totaling a projected $12.8 \u2064trillion \u200din 2022. \u200dIn addition, leaders are struggling to keep up with growing debt-servicing costs.<\/p>\n<p>For example, Guizhou, \u2064a southwestern province, is one \u2062of the \u200dmost indebted governments in\u2062 the country, \u200creporting nearly $166 billion in debt at\u200d the end \u2064of last year. The debt-to-GDP ratio is 62 percent.<\/p>\n<p>Hegang, a Chinese city bordering Russia, has maintained debt totals that are more\u200b than double\u200d its fiscal \u2063income. Officials have\u200b responded to these \u200bfiscal \u2064holes by implementing more \u2064pecuniary restraints \u200bdue to enormous annual budget deficits.<\/p>\n<p>Experts note that local government financing vehicles (LGFVs) \u200bhave contributed to \u2062these issues. LGFVs\u2064 have functioned \u200das funding mechanisms to\u2062 support \u200dinfrastructure projects. In\u200b 2020, for instance<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Is China&#8217;s &#8220;miracle&#8221; fading? The second-largest economy faces challenges: slow growth, weak currency, youth joblessness, declining manufacturing, and troubled property sector. &#8220;Huge structural problems&#8221; threaten its economy.<\/p>\n","protected":false},"author":278,"featured_media":2020041,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[543],"tags":[],"class_list":["post-2020040","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-epoch-times"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2020040","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/278"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2020040"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2020040\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2020041"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2020040"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2020040"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2020040"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}