The Wall Street Journal reported dismal news for China as the country’s economy continues to lose momentum after the Covid-19 pandemic.
The Chinese economy grew in November in many areas but came in much lower than economists expected. In the retail sector, which is the key component and growth identifier of domestic consumption, only increased by 10.1% from last year but fell very short of what economists believed to be a 12.9% increase.
According to an interview with Bruce Pang in the WSJ, Chief China Economist at Jones Lang explained “Today’s data shows a flurry of supportive measures has not yet been successfully translated into near-term growth due to weak business confidence.”
Average home prices in China fell by 0.7% for the year and the debt-laden real estate sector proves to be a major drag on the economy. The WSJ reported that property investment and home sales continue to decline monthly.
Since 2021, a staggering 40% of companies that built new Chinese homes have defaulted on their debts, having to strike major deals with their debts in order to avoid a complete catastrophe.
However, the Chinese industrial output did increase by 6.6% year-over-year beating expectations.
China’s central bank has not taken this data lightly and decided to flood their financial system with over $112 billion in capital in the hopes to increase market liquidity, including access to one-year loans. This influx of capital is the largest ever supplied in order to grow their economy. No stimulus talks have been announced by leaders to help aid domestic spending, but talks of monetary policy support may occur in the upcoming year.
Foreign investors are very concerned with the lackluster economic data and in response have pulled out $31 billion in investment to areas with a higher possible return and 2024 projections look worse with analysts expecting an additional $65 billion to be pulled out.