Kavan Choksi Wealth Advisor talks about the state of China’s economy

Estimated read time 3 min read

As per a median estimate in a recent survey, the gross domestic product (GDP) of China rose 5.1% in 2023, down from an earlier prediction of 5.2%. As per Kavan Choksi Wealth Advisor, the country’s GDP is also expected to rise by just 4.5% in 2024, a decline from 4.8% as predicted previously. The economy of China expanded 6.3% over the second quarter of 2023, falling well short of forecasters’ expectations. The country is struggling from record youth unemployment, severe real-estate crisis and deflation.

Kavan Choksi Wealth Advisor provides insight into the state of China’s economy

Beijing lowered its official GDP target for 2023 to just 5% in March. It has also responded to signs of stuttering growth by slashing several key interest rates, loosening housing market restrictions, as well as cutting stamp duty taxes.  The reluctance of the policymakers to roll out a so-called “big bang” economic fix however has been detrimental to the stock prices and dragged the Chinese Yuan close to an all-time low against the dollar, with further depreciation to be expected.

China is longer set to eclipse the US as the biggest economy in the world, at least in the near future. The country may not never even consistently pull ahead to claim the top spot as the confidence slump of China becomes more entrenched. It may take as long as the mid-2040s for China’s gross domestic product to exceed that of the US. Moreover, even then, it may happen by a small margin prior to falling back. Before the pandemic, however, many analysts did expect China to take and hold pole position as early as the start of the next decade. Optimism in regard to China’s growth in the medium-term remains grounded in the expansive size of the economy, considerable space to catch up to global technology leaders and the development focus of the government. However,  these drivers are “operating with diminished force.”

China’s economy expanded by 3% last year, which was one of its slowest rates of growth in decades as pandemic controls and a property crisis battered the nation. The eventual reopening of China did provide hope that its economy would bounce back in 2023. However, its recovery has lost steam as the real estate slump deepens in the country, along with tumbling exports. Kavan Choksi Wealth Advisor points out that in addition to these concerns, China is also dealing with many other deeper, longer-term challenges.

China clocked its very first population drop last year since the 1960s. This gave rise to concerns regarding weakening productivity. Regulatory crackdowns have also hit confidence, along with geopolitical tensions with the United States and other Western governments. In contrast, the United States does appear to be in a much better shape than what many economists predicted before. Moderating inflation, sturdy consumer spending and strong labor market have especially fueled confidence in the ability of United States’ to avoid a recession for now. Estimated potential growth for the in 2022-2023 is at 1.7%, with long-term forecasts showing a gradual drifting down to 1.5% by 2050.

You May Also Like

More From Author

+ There are no comments

Add yours