Still, The Country Won't Experience 2 Quarters Of Negative Growth

China's economy is experiencing a period of sluggish growth as a result of Beijing's zero-tolerance stance to Covid-19. Economists are debating whether or not to use the term "recession" to characterize the situation.

  • Many economists believe that a recession requires two consecutive quarters of contraction, which is improbable in China. The country has a number of options for outpacing the United States and Europe this year, including the opportunity to unleash massive government support
  • However, economists warn that underlying conditions, exacerbated by Covid lockdowns in Shanghai and elsewhere, are beginning to resemble a recession, which China hasn't seen in decades

Fewer Jobs And Reduced Spending

Confidence has deteriorated as millions of recent graduates are having difficulty finding work and are putting more money aside. Furthermore, a result of the war in Ukraine, Chinese enterprises have seen their expenses rise, and their exports have dwindled.

  • Last year, real estate, which is a major generator of the economy, fell sharply as developers defaulted on their payments and home sales plummeted
  • Any protracted slowdown in China will be felt around the world, robbing the global economy of one of its most reliable engines at a time when inflation and war are causing recession fears in the United States and Europe

A Reprieve?

Not all is lost as President Xi Jinping strives to support the economy and hinted a softening of its assault on the once-freewheeling digital sector on Friday, sending shares in online heavyweights jumping.

  • In a meeting chaired by Xi, China's influential Politburo announced it will increase policy support for the world's second-largest economy, particularly its so-called "platform economy," boosting investor optimism that an unprecedented, multi-pronged crackdown that began in late 2020 may be coming to an end
  • According to two people familiar with the situation, China's senior leaders are planning a symposium with a number of internet companies early next month, which is expected to be hosted by Xi


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