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According to economists, deflationary pressures brought on by China’s economic problems are a concern for the entire world and are anticipated to worsen in the upcoming quarters.
The National Bureau of Statistics’ decision to stop publishing data on youth unemployment as rates reached record highs and July’s data generally falling short of expectations highlight Beijing’s failing economic fundamentals, which have become glaringly apparent in recent months.
The country’s enormous real estate market has continued to face difficulties, with once-vibrant developer Country Garden on the verge of default and heavily indebted real estate giant Evergrande Group filing for bankruptcy protection in the US earlier this month.
Credit data for July also revealed a decline in borrowing demand from businesses and households.
In contrast to the major economies in the West, China’s headline consumer price index experienced deflation for the first time in more than two years in July, declining 0.3% year-over-year.
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China’s Economic Woes and Global Concern in the Market’
Although temporary variables like lower energy and pork prices may have contributed to part of the headline weakness, dropping prices in shelter and related categories as a result of the struggling real estate market have also had a negative impact on core inflation.
China continues to be the world’s top manufacturer despite shifting relationships between the country and the global economy as Beijing attempts to switch to a consumption-led development model and trade tensions with the West remain high.
Therefore, it is possible that China’s economic fragility and declining prices, particularly those of its producers, will spread to other markets, which will be beneficial for Western central banks’ efforts to combat high inflation in the short run.
Due to gloomy data and declining consumer confidence, China’s central bank stepped up measures to slow down the rapid devaluation of its currency on Friday, but the market didn’t seem to believe Beijing was doing enough to buck the current trends.99
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Source: www.cnbc.com
