As of December 2024, China's economy is exhibiting signs of significant distress, with various indicators suggesting a slow collapse. The Producer Price Index has now fallen for 26 consecutive months, and the GDP deflator has remained negative for six quarters, raising alarms about the overall health of the economy [6da0bfd2]. Although the National Bureau of Statistics reported a GDP growth of 4.6% in the third quarter of 2023, other estimates, such as those from the Rhodium Group, suggest that actual growth may be as low as 1.5% [6da0bfd2]. Gao Shanwen has even posited that the GDP figures may be overstated, with real growth potentially around 2% [6da0bfd2].
Consumer sentiment has also been affected, as the Consumer Price Index rose by only 0.2%, falling short of the government's 3% target [6da0bfd2]. This stagnation in consumer prices reflects a broader trend of weak domestic demand, which has been a persistent issue for the Chinese economy. The debt-to-GDP ratio is estimated to be alarmingly high, between 350% and 400%, indicating a potential debt crisis on the horizon [6da0bfd2].
In response to these economic challenges, the Politburo announced moderately loose monetary policies on December 9, 2023, aiming to stimulate growth [6da0bfd2]. However, the effectiveness of these measures remains in question, especially as the Renminbi continues to weaken against the U.S. dollar [6da0bfd2]. Xi Jinping's focus on investment over consumption has drawn criticism, with analysts like Anne Stevenson-Yang arguing that this approach may not adequately address the underlying issues plaguing the economy [6da0bfd2].
As of November 2024, retail sales in China grew by only 3.3%, a decline from 4.8% in October, which further emphasizes the need for urgent policy interventions [dfb05650]. Fu Linghui, a spokesman for the National Bureau of Statistics, acknowledged the increasing complexity of the external environment and insufficient domestic demand, highlighting the necessity for additional stimulus measures [6c0f3927].
The ongoing property crisis continues to weigh heavily on consumer confidence, with property investment plummeting by 10.4% year-on-year from January to November 2024 [6c0f3927]. Despite a slight increase in industrial output of 5.4% in November, the overall economic outlook remains precarious [dfb05650].
Looking ahead, the Central Economic Work Conference has emphasized the importance of boosting consumption and maintaining an 'appropriately loose' monetary policy to stimulate growth [dfb05650]. However, analysts remain skeptical about the long-term sustainability of these stimulus measures, with Julian Evans-Pritchard from Capital Economics expressing doubts that they will lead to lasting improvement [84395a7d]. The upcoming legislative session in November 2024 is expected to focus on further fiscal measures to stimulate the economy, but the situation remains fluid as China navigates its recovery amidst global inflationary pressures [de20c1b3].