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Signs of damage found in the Great Wall’s base

The once-thriving Chinese economy is now facing severe challenges, prompting analysts to question its future prospects. The economy’s remarkable four-decade growth streak appears to have come to a standstill, resembling the prolonged stagnation witnessed by Japan in the 1990s and beyond.

Evidences of the economic slowdown are abound. In 2022, China’s GDP only managed to grow by 3%, falling well short of the targeted 5.5%. The inflow of net foreign direct investment (FDI) took a substantial hit as well, plummeting from USD 344 billion in 2021 to USD 180 billion in 2022. This marked the lowest FDI inflow in five years.

The challenges have intensified in 2023, prompting some analysts to revise their growth projections from an initial 5.5% to a more modest 4.5%. In the first half of the year, net FDI dropped by 3% compared to the previous year, amounting to USD 98 billion. Notably, China’s exports experienced a significant decline, contracting by 14.5% in July, while imports saw a 12.4% decrease compared to the same period in the previous year.

Furthermore, China’s exports for the first seven months of the year displayed a 5% decrease year-on-year, with imports declining by 7.6% over the same period. The situation worsened with alarming youth unemployment rates, reaching 21.3% in June. In response, China halted the release of official unemployment data, adding to the growing concerns about the health of its economy.

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