Market

As China’s economic growth slows, many are noting similarities between China and Japan before and after the collapse of the latter’s bubble economy. Will China really follow in Japan’s footsteps? Wu Junhua of the Japan Research Institute disagrees, suggesting that the biggest risk facing China’s economy is “Sovietization,” not “Japanization.” “Sovietization” Has Hindered China’s Development At a time of growing concerns about China’s economic prospects, voices are escalating about the possible “Japanization” of China’s economy. Although many of the problems facing China today, such as an aging population, deteriorating housing market, and accumulated debt, are quite like those faced by Japan before and after the collapse of the bubble economy, the two countries have very different p...

China’s National Bureau of Statistics (NBS) has released the economic data for July 2024, providing a detailed view of the country’s industrial, retail, and investment performance. The figures reveal a mixed economic landscape, with retail sales exceeding expectations, yet industrial production falling short of forecasts. The continued expansion of consumer spending indicates growing domestic demand, despite persistent challenges in the real estate sector and fixed asset investments. As the Chinese government focuses on boosting domestic demand, the challenge of maintaining economic momentum amidst structural adjustments and external uncertainties remains a significant concern moving forward. Industrial growth slows but maintains a steady pace In July, China’s industrial sector e...

Overview There was nothing in China’s latest data release to fundamentally change our views around its economy – authorities continue to prioritise the supply side of the economy, which, in the face of subdued domestic demand, is expanding export volumes and leading to growing trade tensions with other major economies. Our forecasts are unchanged – we see growth at 4.7% this year (below the full year target) and easing further to 4.6% in 2025 and 4.4% in 2026. Growth in industrial production has trended lower in recent months, down to 5.1% yoy in July (compared with 5.3% yoy in June and 6.7% yoy in April). While conditions in construction related sectors remains weak, output in the electronics sector remains comparatively strong. There was a noticeable slowing in real investment...

After cash-strapped Pakistan secured a new $7 billion (€6.5 billion) bailout package from the International Monetary Fund (IMF) in July, Islamabad has started talks with Beijing on reprofiling billions in Chinese debt as it seeks to enact economic reforms. On the table are proposals to delay at least $16 billion in energy sector debt to China, along with extending the term of a $4 billion cash loan facility due to depleting foreign exchange reserves. Last week, Pakistani Finance Minister Muhammad Aurangzeb was in Beijing to present proposals on extending the maturity of debt for nine power plants built by Chinese companies under the multibillion-dollar Pakistan China Economic Corridor (CPEC). On Friday, Prime Minister Shehbaz Sharif told a feder...

China’s economic development over the last several decades has been remarkable amid rapid growth. We project growth will remain resilient at around 5 percent in 2024, despite the continued property sector adjustment. At the same time, China has relied too much on investment as opposed to consumption. Diminishing productivity and an aging population risk restricting growth, which we expect to slow significantly in coming years, to around 3.3 percent in 2029. Addressing these challenges requires a comprehensive and balanced policy approach. Given these circumstances, the country’s service sector is an underexploited driver of growth—which was also recognized at the Third Plenum. Reallocating resources to services has helped boost productivity over the past two decades. And i...