China's Economic Slowdown: The Depths of Despair
China's economic activity data for July fell short of expectations, raising concerns about a deeper and longer-lasting slowdown in growth. Unlike previous instances, this slowdown is different as China's debt-fueled investment in infrastructure and property has peaked, and exports are slowing. The focus now is on boosting household consumption to compensate for weaknesses in other sectors. Economists suggest measures such as government-funded consumer vouchers, tax cuts, faster wage growth, and building a social safety net. Interest rate cuts alone are seen as insufficient, and there are concerns about yuan depreciation and capital outflows. The possibility of Japan-like stagnation and the stress in the property market further add to worries about China's growth prospects.
