Even with whispers of growth after months of economic stagnation in China, many consumers, experts and investors remain unconvinced that the economy is strong.
Barons has tracked sentiment throughout the post-pandemic period through follow-up surveys with many consumers and small businesses. The result is that they don’t think their financial situation will improve.
“For myself and most of my friends in this area, it’s not as busy as it was before the pandemic,” Xiao Gai, 32, an art director from the western metropolis of Chongqing, said in a phone interview. .
Asked whether factors such as the explosion of AI tools might explain the drop in customer requests, Xiao said: “Everyone uses AI to some extent. But it’s more about reducing the budgets of the clients I speak to, and as a result our projects are smaller.”
Guo Qingfeng, an IT employee at a major high-tech company in Beijing’s “Silicon Valley” known as Zhongguancun, said his company has seen an uptick since April, when it began to become clear that China’s economic recovery would be temporary. He said promotions have been frozen. The best. “My workload has increased, but my salary hasn’t increased,” he says.
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The refusal of a large real estate market to respond to stimulus checks continues to be a drag on the economy. Property prices fell by the most in eight years in October, with new home prices in 70 cities falling 0.38% last month, down from a 0.3% drop in September, data released by the National Bureau of Statistics on Thursday showed.
This was despite a number of policy support measures, including lower down payments for homeowners and forcing lenders to cut mortgage rates in September.
The Chinese government said it plans to provide at least 1 trillion yuan ($138 billion) in funding for affordable housing programs. However, temperature measurements in other areas have not shown a clear prognosis.
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The hot consumer sector beat expectations for the second month in a row in October, according to official data this week. The year-on-year growth rate of retail sales last month was 7.6%, exceeding market expectations of 7%. However, much of that was due to last year’s poor base effectiveness. It is difficult to measure how much growth actually occurs.
Private surveys on consumer demand and business confidence paint a pessimistic picture. An October poll by the Yangtze River Graduate School of Management showed that private business sentiment had declined.
Consumer demand for recreation and transportation also fell slightly, according to data released last month by French fintech research firm QuantCube Technology.
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The market seems as confused as ever. April’s weak data also reflects a bearish market for mainland and Hong Kong indexes, with the large-cap CSI 300 down nearly 8% year-to-date and the Hang Seng Index down 11.8%.
The rise in October is thought to be mainly due to investors buying in conditions that appeared to be bottoming out. But the market has only fallen since Wednesday’s better-than-expected retail sales and industrial production numbers.
Part of the reason is that China continues to experience deflation, making increases in production and exports largely meaningless if prices fall.
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“The performance of the Chinese market is terrible because obviously the Chinese economy is terrible. And Hong Kong, which is mainly made up of mainland Chinese companies, is essentially an agent for China.” said Doug Young, director of Bamboo Works, which provides analysis of Chinese companies listed in Hong Kong.
Continued policy support is mainly aimed at the infrastructure and real estate sectors, which have so far remained cautious among experts and investors.
The International Monetary Fund cited China’s promise to continue measures through the end of the year as the reason for raising its economic growth forecast for 2023 from 5% to 5.4%.
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“Authorities have introduced a number of welcome measures to support the real estate market,” IMF Deputy Managing Director Geeta Gopinath said in a statement. “But more needs to be done to ensure a faster recovery and lower economic costs during the transition period.”
Others are similarly vague. Sina Yue, China economist at Capital Economics, said while the latest figures continue to show weakness, things could have been much worse. But she said in her note that growth remained sufficiently concerning that support policies could be tightened.
But for some, China’s problems are more obvious because they are systemic.
“The problems facing China’s economy are not the result of recent policy shifts,” said Beijing-based economist Michael Pettis. “These are the almost inevitable consequences of deep imbalances that date back nearly two decades and have been clear to many economists for more than a decade. It is also a problem faced by
