### Summary
Beijing is focusing on domestic consumption to offset low external demand.
### Facts
- 🏭 Beijing aims to boost domestic consumption to counterbalance weak foreign demand.
- 🌴 Shandong becomes the latest Chinese province to promote annual leave, despite being legally guaranteed, only 60% of Chinese workers take it.
- 📜 Beijing has recently released measures to encourage holiday and leisure spending.
China's real estate crisis, caused by a crackdown on risky behavior by home builders and a subsequent housing slowdown, is spreading to the broader economy, leading to sinking sales, disappearing jobs, and a decline in consumer confidence, business investment, and stock markets.
China is facing a severe economic downturn, with record youth unemployment, a slumping housing market, stagnant spending, and deflation, which has led to a sense of despair and reluctance to spend among consumers and business owners, potentially fueling a dangerous cycle.
China's real estate market is experiencing a significant downturn, causing major developers to face massive losses and mounting debts, which is impacting the country's economy and global growth.
China's economic slump is worsening due to the prolonged property crisis, with missed payments on investment products by a major trust company and a fall in home prices adding to concerns.
China's economic slowdown, marked by falling consumer prices, a deepening real estate crisis, and a slump in exports, has alarmed international leaders and investors, causing Hong Kong's Hang Seng Index to fall into a bear market and prompting major investment banks to downgrade their growth forecasts for China below 5%.
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.
Long visa wait times, gun violence, and geopolitical tensions have caused a significant drop in Chinese tourists visiting the United States, leading to a multibillion-dollar loss in tourism revenue for the country.
Thailand's tourism and exports, particularly in the chemical and plastic sectors, are expected to decline due to the economic slowdown in China caused by the real estate crisis, leading to a significant decrease in the number of Chinese tourists visiting Thailand and affecting the country's overall economy.
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 faces challenges in rebalancing its economy towards increased consumer spending due to the economic growth model that relies heavily on investment in property, infrastructure, and industry, as well as the reluctance of households to spend and the limited social safety net; implementing demand-side measures would require difficult decisions and potential short-term pain for businesses and the government sector.
China's economic slowdown is causing alarm across the world, as it is expected to have a negative impact on global economic growth, leading to reduced imports and trade, falling commodity prices, a deflationary effect on global goods prices, and a decline in tourism and luxury spending.
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.
Chinese consumer spending has rebounded in certain sectors, but concerns persist over the property market and GDP growth falling below 5%, according to Shehzad Qazi, managing director of China Beige Book.
Chinese homebuyers remain skeptical about entering the property market despite the Beijing government's measures to revive the economy, including lower mortgage rates, due to concerns about the slowing economy and the deepening crisis in the debt-ridden property sector.
The slowdown in China's property market continues despite government measures to revive the economy, with analysts warning that the sentiment among many Chinese is too weak for these moves to be effective.
China's efforts to attract international tourists after reopening its borders have been met with low bookings and a 70% drop in international travelers in the first half of this year, attributed to the lasting damage from the pandemic, China's negative global image, and geopolitical tensions; analysts predict it could take another three years for visitor numbers to reach pre-pandemic levels.
China's relief measures to support the property sector have spurred a home-buying spree in Beijing and Shanghai, with transaction volumes in both cities increasing significantly, indicating robust housing demand; however, concerns persist that this demand may not be sustained due to other restrictions and a faltering growth outlook.
China's exports and imports continued to decline in August due to weak overseas demand and sluggish consumer spending, posing challenges to the country's economic growth targets.
China's measures to support the property sector are lowering monthly mortgage payments for homeowners but also reducing interest earnings on bank deposits, highlighting the challenge of promoting consumer spending in a weak economic climate.
New home sales in Beijing have increased by 16.9% in the week of September 4-10, indicating that government efforts to revive the property sector are having an impact in the Chinese capital. However, the rebound in sales is not reflected across the rest of China, with sales falling 20% on average nationwide.
China's real estate and construction sectors are struggling, leading to fears of economic stagnation as consumer spending declines and other areas of the economy are not growing fast enough to make up the difference.
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.
Economic activity in China appears to improve in August as industrial production and retail sales show growth, however, the real estate sector continues to face challenges with property investment and sales declining, leading Moody's to downgrade its outlook for the sector.
China's economy is facing challenges due to its real estate crisis and high levels of mortgage debt, but the government is hesitant to provide fiscal stimulus or redistribute wealth, instead aiming to rely on lending to avoid a potential recession. Banks have cut interest rates and reserve requirements, but it is unlikely to stimulate borrowing. However, economists predict that policymakers will intensify efforts in the coming months, such as changing the definition of first-time home buyers and implementing property easing measures, to address the economic downturn.
The outlook of U.S. companies on China's markets in the next five years has hit a record low due to factors such as political tensions, tariffs, slow Covid recovery, and issues in the real estate market; however, complete decoupling between the two economies is unlikely.
Chinese investors are rushing to sell their overseas properties, particularly in Southeast Asia, due to worsening financial conditions and the need for cash to solve domestic issues such as business failures and mortgage loan defaults. Uncertain economic conditions, low confidence in production and consumption, and tightening regulations on property developers in China have contributed to the struggle to offload these investments.
Hotels in Phuket are experiencing strong demand from a diverse range of markets, with Chinese tourists returning and international travel demand rebounding, leading to expectations of a successful high season despite a sluggish European economy and weak British currency.
China's urbanization drive is slowing down, which is expected to further impact the struggling property sector that has been plagued by debt problems and declining consumer confidence. Managing the excess housing supply and diversifying the economy away from reliance on the property sector are crucial for a healthier Chinese economy.
China's tourism industry is struggling to recover from the pandemic, with international tourism still far below pre-pandemic levels, and the shortage of tourists is attributed to factors such as challenges with payment methods, detainment of foreigners, and expensive and limited flights from the US, which is worrisome as it adds to China's other economic problems and could have a negative impact on the global economy.
China's flailing real estate sector may take up to 10 years to fix, according to economist Hong Hao, as the sector continues to suffer from a debt crisis and oversupply, while demand is in long-term decline. Beijing officials are grappling with the challenge of reducing reliance on real estate without harming the economy in the short term.
A record number of Chinese are choosing to travel domestically during the Golden Week holiday, potentially boosting domestic consumption but disappointing travel agents who were hoping for a rebound in overseas tourism since the end of the pandemic.
China's economic outlook, particularly for the real estate sector, is expected to become clearer in the last three months of the year, with potential government support and loosening of restrictions to stabilize the housing market and allow the economy to recover fully by mid-2024. However, economists predict that real estate growth will remain weak and prices may fall gradually, as significant price declines could have adverse social consequences.
The strain from interest rate hikes is starting to impact the real estate market, particularly in Germany and London, as well as the Chinese property sector; corporate debt defaults are increasing globally; banking stress remains a concern, especially regarding smaller banks and their exposure to commercial real estate; and the Bank of Japan's tighter monetary policy could lead to a sharp unwind of investments, potentially impacting global markets.
China plans to implement measures to make it easier for foreign tourists to book tickets, register at hotels, and use overseas bank cards, in order to boost tourism numbers.
Chinese tourists are adopting a budget-conscious approach to travel during the long holiday as they prioritize saving money and exploring domestic destinations due to lingering concerns about the country's slowing economy.
China's economic growth appears to be slowing down, with issues such as an aging population and a collapsing housing sector leading to speculation that the country's economic miracle may be coming to an end, while its diplomatic strategies have also caused strain on international relationships.
The era of revenge travel may be coming to an end as travel intentions decline, particularly in Europe, due to rising travel costs and economic factors, while even in Asia-Pacific, pent-up demand for travel is expected to fade and travel preferences may shift to domestic destinations in China.
China's property crisis poses significant challenges for an economy heavily reliant on real estate, although there are some sectors that may benefit from the situation.
The slow recovery of foreign tourism in China due to visa obstacles and fears of the country is hindering the nation's economy and its ability to attract foreign investment.
Chinese tourists fueled a temporary boost in tourism revenues during the recent national holiday, reaching pre-pandemic levels and contributing to the country's economy, despite concerns over a real estate crisis and high youth unemployment.
