Growth has stagnated, unemployment is at record highs, the property market is tumbling, and companies are grappling with supply chain problems. China’s economy is clearly in serious problems.
One of the main reasons is the extreme anti-epidemic policy, with massive testing and lockdown as the basic measures implemented by the Chinese Communist Party.
According to CNN, at least 74 cities in China have been closed since the end of August, affecting more than 313 million residents.
Last week, Goldman Sachs estimated that cities affected by the lockdown account for 35% of China’s GDP.
Chief Greater China economist for ANZ Research Raymond Yeung said that the Chinese economy would continue to deteriorate in the next few months.
Yeung added that a sharp slowdown in the global economy would not be favorable to China’s economic growth. Weak demand in the U.S. and European markets will affect Chinese exports.
Yeung predicts that China’s GDP will grow only 3% this year, far short of the 5.5% target set by Beijing.
China’s GDP grew by just 0.4% in the second quarter of 2022 year-on-year, down sharply from 4.8% growth in the first quarter of this year.
According to China’s National Bureau of Statistics, the country’s Producer Price Index, a measure of the cost of producing goods, in August 2022 increased by 2.3% over the same period. Meanwhile, service growth contribution.
China’s job market has deteriorated over the past few months. The unemployment rate between the ages of 16 and 24 hit an all-time high of 19.9% in July, the fourth consecutive month of record-breaking. That means China now has about 21 million unemployed youth in cities and towns.
The deepening downturn in the real estate market is another important cause of the Chinese economy’s difficulty.
This sector contributes up to 30% of China’s GDP. However, real estate prices and sales of new homes have fallen sharply.