The Chinese economy is at a crossroads. Currently, it is facing two serious issues that may halt economic growth. Nevertheless, the authorities have no other choice but to deal with one problem at a time. So, Beijing has to make either COVID-19 or the gradually plummeting real estate sector a priority. The impending slowdown in the economy is inevitable due to such serious challenges. Demand for goods from China is falling while Western countries are lifting restrictions and lockdowns. China needs global customers but its harsh response to COVID-19 may disrupt global supply chains. As a result, Chinese manufacturers are losing their clients. At the same time, the real estate sector threatens to hinder the economic recovery. Notably, the industry has been pushing the economy to the upside in recent years. The government is avoiding chaotic defaults in this sector, but it has failed to create necessary conditions for fundamentally sound companies to find credit opportunities. In China, outstanding loans are growing at the slowest rate in 20 years at 11.6% yearly. In addition, the Chinese market may remain vulnerable to other shocks, such as the government’s crackdown on the country's largest Internet companies that began last year.
