Finance: The Chinese economy weakened! Beijing in the forefront

The long-awaited economic awakening is turning into a heavy jolt for China. The finance statistics from the first months of 2024 reveal a lackluster and unbalanced recovery. Household consumption is faltering. Real estate is sinking into crisis. Youth unemployment is exploding. Despite the measures taken, Beijing is struggling to sustainably steer its weakened economy back on course.

A Recovery Struggling to Take Hold

The figures are troubling in China. In January-February, retail sales growth was only 5.5%, a pace slowed down from the previous months. Worse, expectations were thwarted. Industrial production, up by 7%, is a scant cause for satisfaction in finance circles.

Fixed investment, at +4.2%, also disappoints. Particularly alarming, real estate is collapsing with a plunge of 9% in investments year-on-year. A seismic shock for this critical sector long driving the growth of Chinese finance.

As for unemployment, it is reaching peaks in urban areas at 5.3%. But it is among young workers aged 16 to 24 years that the situation turns to tragedy with a paltry rate of 14.6%. A potentially sacrificed generation.

Beijing at the Forefront of Finance

Faced with urgency, the Chinese authorities are shown on the front lines. Reforms, budgetary stimulus, bond rate cuts, nothing has been neglected in an attempt to rectify the situation. But results in finance are slow to come.

During the annual parliamentary session in March, ministers had to acknowledge their difficulties. “The pressure on employment remains high,” admitted Wang Xiaoping, the Minister for Human Resources. Ni Hong, in charge of Housing, pointed out the “very great difficulty” in stabilizing the real estate market.

Even the 2024 growth, with a target revised down to 5%, now appears to be a major challenge according to the government’s own words. A rare admission of helplessness from Beijing.

The lungs of Chinese finance are congested. The recovery is desperately awaited. Against its usual voluntarist tendencies, the regime this time seems somewhat overwhelmed by events.

The coming months are critical for the economy and Chinese finance. After the anticipated euphoria of a virile post-Covid rebound, a cold shower looms. The rate of recovery currently observed presages the worst: a relapse into recession. All the red signals alert Beijing to the danger. But this time, the usual levers seem stuck. Real estate remains mired, youth unemployment is exploding, and household consumption is slowing down. A volatile cocktail with serious repercussions for future growth.