China has charted an economic growth trajectory that put it on track to become the world’s most dominant economic power by the middle of this decade. The United States remains the largest economy on the planet by gross domestic product (GDP). Meanwhile, China is the second-largest economy on the planet with Germany, Japan, and India rounding out the remaining top five.
The Asian great power has seen its economic prestige dimmed in recent months. For example, China’s industrial output increased by 3.7% in July of this year compared to July 2022. However, this was down 4.4% compared to the previous month. Retail sales in the month of October 2023 fell by 2.5% year-over-year. Moreover, the unemployment rate for workers between the ages of 15 and 24 rose to 21.3%, which stunned analysts.
One of the most troubling developments has been the decline of China’s real estate sector. Sandeep Rao, head of research with Leverage Shares, recently said that the Chinese real estate sector was “saturated” with properties across China’s top 100 cities. Many of those properties stand vacant or incomplete. Land values have also declined in all regions, excepting Beijing, Shanghai, and Guangzhou.
China has reportedly considered dramatic measures to reverse its real estate fortunes, including the easing of migration restrictions. Moreover, China is also wrestling with ongoing issues with its banking system. It will look to address those issues through the middle of this decade. However, China must face the short term pain of this transition as the country is expected to experience a GDP pullback of 4.6% in 2024.
