As a result, China’s economy is under tremendous pressure. November’s new data shows the lowest reports in almost three years. The economy is staring down a recession with worsening conditions. In response, the Chinese government has committed itself to showcasing the situation by devoting its greatest influence on stabilizing the rebellious mood.
This week’s high-frequency data confirms that the pain extends to every corner of the Chinese economy. This is particularly the case given the current turmoil in the property market. In reaction, the Chinese leadership, including the State Council, have called for a short-term focus on increasing consumption by the Chinese people. Stimulating consumer spending will revive growth, that’s the puzzle. Their goal is to reduce the damage created by the property crash.
The economic risks posed by this pandemic are enormous, but the federal government is rising to meet these challenges. They’re testing ways to calm the key property sector, battered by a crisis of confidence. The property market—a mainstay of the Chinese economy—has long been one of these pillars. Unfortunately, its recent crisis threatens not only builders and investors, but the stability of the entire economy.
The Chinese leadership is acutely aware that the only way to achieve a durable economic recovery is by increasing consumption. By encouraging citizens to spend more, officials hope to foster a more robust domestic economy that can withstand external pressures. Through a host of supportive policies, combined with incentivizing consumer spending, the government hopes to lay the groundwork for a much more dynamic business and economic climate.
Despite these efforts, challenges remain. Yet, as analysts are quick to point out, China is facing some unprecedented economic headwinds. These factors range from increasing levels of indebtedness to decreasing rates of economic growth. It is imperative that federal, state and local policymakers act in concert across sectors to counter these trends. They badly need support from the private sector to succeed.