The juggernaut of the Chinese economy is losing steam. The dragon economy, which grew in double digits for more than two decades, is struggling to even clock a 5% growth rate. It has big ramifications for the world’s second-largest economy and the challenger to the United States.
Credits
Producer Ankit Panwar
Scripted By Prachi Khanna, Ayaan Kartik
Credits
Producer Ankit Panwar
Scripted By Prachi Khanna, Ayaan Kartik
Category
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NewsTranscript
00:00 The second largest economy is stumbling and China could be facing an extended economic downturn.
00:06 China's economy is losing further momentum.
00:09 China is slowing down.
00:11 The US president has described China as a ticking time bomb.
00:28 The juggernaut of the Chinese economy is losing steam.
00:32 The dragon economy, which grew in double digits for more than two decades, is struggling to
00:37 even clock a 5% growth rate.
00:40 It has big ramifications for the world's second largest economy and the challenger to the
00:44 United States.
00:47 Chinese real estate sector is in deep trouble.
00:51 And the global slowdown has been harsh on the country's manufacturing sector.
00:55 The two sectors together account for 56% of the Chinese economy.
01:01 The state of the Chinese real estate sector is so bad that millions of houses are lying
01:05 empty, wiping off the wealth of the middle class, which had invested its lifelong savings
01:10 in these assets.
01:12 The strategy of fueling GDP growth on the back of the construction sector has backfired
01:17 for Xi Jinping's government.
01:20 Xi has got several things wrong since the COVID pandemic.
01:24 His zero tolerance policy to control COVID spread for three years has backfired.
01:30 Unlike the United States, the Chinese government did not provide substantial subsidies to households
01:35 and enterprises during the pandemic, leading to a notable decline in demand.
01:40 This absence of support measures has had a profound impact on the overall economic landscape.
01:47 In June 2023, China witnessed a record high in the jobless rate for individuals aged 16
01:53 to 24 in urban areas, surpassing 20%.
01:58 Following this, China ceased the release of youth unemployment figures, which are considered
02:03 a crucial indicator of the country's economic slowdown.
02:07 What would also worry Chinese policymakers is the slowdown in factory activity.
02:13 In its heyday, the economy thrived on export-oriented manufacturing.
02:17 However, the current year has witnessed a slowdown in both export and manufacturing
02:23 sectors.
02:24 The global demand for Chinese-made goods has slumped due to the impact of the coronavirus
02:29 pandemic and the ongoing trade dispute with the United States.
02:33 Its exports have fallen for six months on the trot this year.
02:38 Investors have sharply reacted to the developments.
02:41 For the first time in 25 years, FDI fell into negative territory.
02:47 Some investors have also fled its stock markets.
02:51 Due to the slowdown in the economy, household wealth has shrunk, threatening a further decline
02:55 in the consumption of goods and services.
03:02 Given the prevailing factors affecting the economy, is it justifiable to proclaim the
03:06 end of China's growth story?
03:09 Several experts argue that despite a significant downturn in the real estate sector, the country
03:14 continues to achieve a growth rate close to 5%, indicating its resilience.
03:19 Notably, China's merchandise trade surplus has also continued to expand, highlighting
03:25 the strength of its export sector.
03:27 These observations challenge the notion of a complete demise of China's growth narrative.
03:33 Despite obstacles, the economy demonstrates noteworthy indicators of stability and potential
03:38 for sustained growth.
03:41 As uncertainties loom over the Chinese economy, it raises questions about the potential implications
03:46 for India.
03:47 India, aspiring to become a global manufacturing hub akin to China, has successfully attracted
03:53 major players like Apple and Foxconn to establish factories, propelling industrial growth.
04:00 The "China +1" strategy has also benefited Indian stock markets, witnessing record inflows
04:06 from foreign investors in 2023, driving the Sensex and Nifty to unprecedented heights.
04:12 However, there is still ground to cover.
04:16 India faces competition from Vietnam and Mexico as firms seek to diversify their supply chains.
04:22 The future outcome will heavily rely on India's ability to further develop its manufacturing
04:27 sector and bolster exports in the coming year, with hopes that the Chinese economy continues
04:32 to slow down.