Seven months after the end of China’s COVID-19 policies, the country’s economy is growing slower than expected, hitting a slump that has raised concerns over whether it is heading toward a collapse.
In July, it was reported that China’s annual rate of GDP growth was slowing down and appeared to be stabilizing at around 4 percent—a level that’s hardly comparable to the incredible growth the country has experienced in the past two decades.
Beijing has so far resisted offering any kind of economic stimulus, and it’s unclear what the policy direction is going to be in terms of helping out the country’s struggling economy. Earlier this month, the People’s Bank of China cut its key interest rate for the second time in three months.
Is China’s economy heading toward a collapse? These are the signs that are playing a part in the country’s growth slowdown and worrying observers about a potential crash.
China’s stunning economic growth in the past two decades created a new bourgeoisie class and improved the living conditions of many of its citizens, with the country declaring last year that it had lifted nearly 800 million people out of poverty.
But the unspoken social contract between the Chinese people and the Chinese Communist Party—acquiescence to a non-democratic system in exchange for economic progress—has recently been broken, with youth unemployment rising significantly this year.
Earlier this month, China decided to stop releasing youth unemployment figures after data from June showed that the country’s jobless rate for 16-to-24-year-olds in urban areas had reached a record of over 20 percent. China’s overall unemployment rate had risen to 5.3 percent last month.
The Chinese yuan fell to its lowest level in 16 years last week, worrying investors about the state of the world’s second-largest economy. In response to the plunge, the People’s Bank of China set the currency at a much higher rate than its actually estimated market value.
On top of the yuan crisis, the National Bureau of Statistics of China (NBS) reported that the country’s economy has officially fallen into deflation after consumer prices fell year-on-year in July—by 0.3 percent—for the first time in over two years.
While China’s economy seemed to be recovering at an excellent speed since the end of its COVID-19 policies, the growth came to something of a grind in April, partly due to slower domestic spending.
