The Chinese economy has some relatively good news share at the beginning of the week. According to reports, the economy of China grew at 5.3 per cent in the first quarter of 2024.
This has surprised many analysts, who did not expect those numbers, given the slowdown of Asia's largest economy. The economy, which grew at 5.2 per cent in the final quarter of 2023, was not expected to do well, or at least was expected to fetch numbers in the range of 4.6 for the first three months of the year.
This good news does not allay all the fears concerning the 'factory of the world'. The country continues to struggle with the much talked about slump in the real estate sector, as Chinese citizens do not appear to have the capacity or the purchasing power to buy properties available at sky-high prices.
China's Woes Of Slowdown
In addition, the apparent stagnation in the prospects of the country, also comes from drop in consumption and as a result of which, the consumer confidence in the country is in shambles.
The pandemic-era boom, that saw China grow exponentially, came to a grinding halt, after 2022, when the second-most populous country saw its fortunes take a turn for the worst. This apart from external factors, was in many ways China's own doing. This, as the country's stringent policies to stop the spread of SARS Cov-2 not only did not work, but added to the woes of economic activities in the country, which slowed down the country. Once the lockdowns were lifted, the infections only rose, in the dearth of any natural immunity, leading to greater infection, further slowing down the pace of any possible economic recovery.
China's infamous and extended lockdowns that slowed the country further. | Photo Credit: AFP
The real estate trouble is supplemented by the burgeoning debt of the local governments, who have accrued resources almost foolhardily to construct infrastructure, which in many cases are redundant vanity project, designed to 'show' growth.
This, in addition to the myriad supply chain issues, that is perennially bogged by factors outside of one, singular nation's control will put the prospects of many, including China's in tatters.
All these factors collectively could throw a spanner into the system of the second largest economy of the world. The news of an unexpected spurt in growth however will give some room for the Xi Jinping-led government, that is trying to pull the economy out of the slump it is in.
