China's fiscal revenue slows as economy struggles
China's fiscal revenue increased by 11.5% in the first seven months of 2023, but the growth rate was slower than the previous six months, indicating a potential decline in the economy's momentum.
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Posted 8/21/2023, 8:16:44 AM
channelnewsasia.com
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China's economy, which has been a model of growth for the past 40 years, is facing deep distress and its long era of rapid economic expansion may be coming to an end, marked by slow growth, unfavorable demographics, and a growing divide with the US and its allies, according to the Wall Street Journal.
China's foreign trade with other BRICS countries increased by 19.1 percent in the first seven months of 2023, accounting for 10.1 percent of China's total foreign trade value during that period.
China's previous economic model of investing in infrastructure and manufacturing led to a period of rapid growth and global export success.
Thailand's economy grew at a slower pace in the second quarter due to weak exports and slower investment, prompting the government to lower its 2023 growth forecast, while the central bank may not raise rates again amidst faltering economic recovery and low inflation.
Malaysia's economic growth in the second quarter of 2023 was the slowest in nearly two years due to sliding exports and a global slowdown, prompting the central bank to warn of lower full-year growth and the possibility of the target being hard to reach.
China's budget deficit has shrunk by more than a third this year, indicating cautious fiscal policy despite economic slowdown and a worsening housing market.
U.S. economic growth may be accelerating in the second half of 2023, defying earlier recession forecasts and leading to a repricing of long-term inflation and interest rate assumptions.
Hong Kong's stock market has benefited from China's rapid growth, with over 1,400 Chinese companies raising $1.05 trillion in the past 30 years.
China's economic challenges, including deflationary pressures and a slowdown in various sectors such as real estate, are likely to have a global impact and may continue to depress inflation in both China and other markets, with discounting expected to increase in the coming quarters.
China's tourism industry is expected to grow faster than its GDP as Chinese consumers shift their spending from property to travel experiences, according to the CFO of Tongcheng Travel.
China's economy is at risk of entering a debt-deflation loop, similar to Japan's in the 1990s, but this can be avoided if policymakers keep interest rates below a crucial level to stimulate economic growth.
China's economy is struggling due to an imbalance between investments and consumption, resulting in increased debt and limited household spending, and without a shift towards consumption and increased policy measures, the economic slowdown may have profound consequences for China and the world.
Forecasters have decreased their growth expectations for China due to deflation, rising youth unemployment, and a property-market crisis, with GDP predicted to rise by only 5.1% in 2023 and 4.5% in 2024.
China's economy is not as bad as perceived, with consumer spending picking up and indicating that growth is moving in the right direction, according to an official at the British Chamber of Commerce in China.
The US economy grew at a slower pace in the second quarter than previously estimated, which is seen as a positive sign for the Federal Reserve's efforts to cool demand and curb inflation.
China's economy will struggle with low growth under 5% through 2024, leading to a "structural hard landing" due to tight monetary policy, disappointing economic reopening, and challenges in real estate and stock markets, according to TS Lombard strategists.
Consumer spending in China rebounded in August, with all categories, including apparel, automotive, food, furniture, appliances, and luxury, experiencing increased sales compared to July, according to a survey by the China Beige Book. Retail sales in July rose by 2.5% year-on-year, raising concerns about China's economic growth, but the August survey showed a surge in spending, particularly in the services sector, which saw continued strength in travel and hospitality. Additionally, corporate borrowing increased as the cost of capital declined, indicating a boost in business activity. However, China's property sector continued to worsen, with house prices barely growing and home sales declining.
China's economic boom, once seen as a miracle, now appears to be a mirage due to failed reforms, an outdated reliance on old economic models, and a growing debt burden, raising concerns about the nation's economic future and the potential for a financial crisis.
China's services activity expanded at the slowest pace in eight months in August, indicating weak demand and a lack of stimulus measures to revive consumption in the country's second-largest economy.
China's services sector experienced a slowdown in business activity, resulting in the lowest level in eight months, as weaker foreign demand and sluggish overseas orders impacted consumption, despite economic stimulus efforts.
Forecasts for China's economic growth in 2023 and 2024 have been cut, potentially hindering the country's goal of becoming a "medium-developed country" by 2035 and surpassing the US as the world's No.1 economy.
China's economy is showing signs of slowing down, including a decrease in GDP growth rate, declining exports, deflationary consumer price index, high youth unemployment, a weakening yuan, and a decrease in new loans, which could have global implications.
China's economic growth has slowed but has not collapsed, and while there are concerns about financial risks and a potential property crisis, there are also bright spots such as the growth of the new energy and technology sectors that could boost the economy.
Policymakers expect slower growth in China, potentially below 4%, as the country transitions to a consumption-driven economy, which could have a negative impact on the global economy and alleviate inflationary pressures.
China's largest online travel agency, Trip.com, expects to achieve annual growth of 15-20% in the next three to five years, despite concerns of a stalled national economy, as the demand for leisure travel remains strong among local tourists and pent-up travel demand is not expected to be short-lived.
China's economy has entered deflation territory and the debt crisis has worsened, while India's economy is thriving with GDP growth expected to exceed 7% and unemployment rates at a 12-year low; it is predicted that India will surpass China in per capita income by 2044 due to factors such as female education expansion, labor force growth, and higher total factor productivity growth.
China's retail sales and industrial production exceeded expectations in August, with retail sales growing by 4.6% and industrial production growing by 4.5%, but fixed asset investment lagging behind at 3.2%, indicating potential instability in the external environment.
China's factory output and retail sales grew at a faster pace in August, but declining investment in the property sector poses a threat to the country's economic recovery.
J.P.Morgan and ANZ have raised their 2023 economic growth forecast for China to 5% and 5.1% respectively, citing a notable recovery in retail sales and a rise in service activity.
Chinese consumers spent over $37 billion on lottery tickets in the first half of 2023, a 50% increase from the previous year, reflecting the struggling economy and high youth unemployment rate in China caused by industries such as education, real estate, and technology being hit by various challenges and regulatory changes.
China's economy requires three more years and increased fiscal spending to recover from the effects of the COVID-19 pandemic, according to think tank researcher Zhang Yansheng.
China's credit is expanding rapidly, with total social financing increasing by over 3 trillion yuan in August, mainly driven by government financing, indicating positive signs of economic stabilization and recovery from the slump in the second quarter. Additionally, recent policy measures, particularly in fiscal and property sectors, are expected to further stimulate the economy.
Treasury Secretary Janet Yellen states that U.S. growth needs to slow to its potential rate in order to bring inflation back to target levels, as the robust economy has been growing above potential since emerging from the COVID-19 pandemic. Yellen also expects China to use its fiscal and monetary policy space to avoid a major economic slowdown and minimize spillover effects on the U.S. economy.