According to Bloomberg, the Chinese economy is failing to perform as expected. China was supposed to provide a third of global growth in 2023. Markets are raising concerns as the Chinese economy has been slowing down for several months. Analysts are concerned about the decline in China’s exports, including construction materials and electronics. Meanwhile, the demand for machines used on construction sites turned out to be much lower than expected. Over the past nine months, exports to Asia and Africa have fallen by more than 14%. At the same time, manufacturing prices have collapsed sharply. At the moment, Chinese consumers spend money mostly on services and tourism, saving on goods. Notably, the income of households decreased after the pandemic and weaker-than-expected economic recovery. In addition, excessive debt burden in the real estate sector and unemployment are among the key problems. Against the backdrop of shrinking economic activity in China, global investors staged a massive capital outflow. They withdrew more than $10 billion from Chinese stock exchanges, mainly from blue-chip stocks. In addition, China’s trade with Asian and African countries was also hit. For the first time in two years, Japan announced a reduction in exports after China cut purchases of cars and microchips in the country. These problems affected South Korea and Thailand, deteriorating their economic forecasts amid the slow recovery of the Chinese economy. According to the International Monetary Fund (IMF), a prolonged slowdown of economic activity in China may hurt the global economy. China’s largest export markets in Asia are likely to be hit the hardest. According to the IMF, a decline in Chinese exports means shrinking exports in the rest of Asian countries.
