A weakening Chinese economy signals a worrying shrinking of international demand for major goods
A street scene outside a shopping mall in Beijing on Wednesday: spending by Chinese consumers is seen as vital to the economic outlook China has stumbled. With the country entering a period of deflation that some have described as “economic long Covid”, growth is stalling.
The economy expanded just 0.8 per cent between the first and second quarters of the year. Yet over the past decade, booming China had been the source of more than 40 per cent of global economic growth. from soybeans harvested in Brazil, to US beef, to luxury goods from Italy, to raw materials from the developing world. That’s bad for the outlook for global growth. China is now the largest commodity consumer in the world.
Post-Covid slump, Beijing faces a host of economic challenges, from a liquidity crisis in the property sector with the country’s largest private homebuilder, Country Garden, ominously missing payments on international bonds, to a sharp fall in exports, flagging foreign investment, and sustained weakness in consumption. In July growth slowed in retail sales and industrial production, while new construction starts were down by a quarter year on year.
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