{"id":319613,"date":"2025-12-16T19:52:11","date_gmt":"2025-12-16T19:52:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/319613\/"},"modified":"2025-12-16T19:52:11","modified_gmt":"2025-12-16T19:52:11","slug":"chinas-economic-crisis-record-exports-but-plummeting-domestic-growth-business","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/319613\/","title":{"rendered":"China’s Economic Crisis: Record Exports but Plummeting Domestic Growth | Business"},"content":{"rendered":"

\"China's TL;DR: Driving the newsChina\u2019s economic engine sputtered hard in November, with retail sales rising just 1.3% – the weakest since December 2022, when \u201czero-Covid\u201d ended – and industrial production slowing to 4.8%, a 15-month low.Meanwhile, fixed-asset investment dropped 2.6%, the worst performance in decades, and property investment plunged nearly 16%. Even the usually robust auto and appliance markets collapsed, with car sales down 8.5% and home appliance sales falling a staggering 19%, per Bloomberg. <\/p>\n

‘No Free Lift For India’: PM Modi’s Chief Economic Adviser Says China Won\u2019t Repeat West\u2019s Mistake<\/p>\n

\u201cThe economy faced a number of challenges,\u201d China\u2019s National Bureau of Statistics (NBS) said. \u201cThere were many external instabilities and uncertainties, and domestic demand was insufficient.\u201d \"China Why it mattersBeijing has been over-reliant on exports to meet its annual growth target of around 5%. That worked in 2025, helping China notch a record $1 trillion trade surplus, but the strategy is showing serious cracks:* Domestic demand is faltering under the weight of a real estate crisis, weak consumer confidence, and fading fiscal stimulus.* Global frustration is rising over China\u2019s massive export surplus.* Protectionist responses are escalating – from the US and Europe to Mexico.\u201cStrong exports limited the need to turbocharge domestic demand this year,\u201d said Xu Tianchen of the Economist Intelligence Unit. \u201cPolicymakers have turned their attention to 2026, since the 5% growth target seems within reach.\u201dBut the warning signs are piling up that next year could be far tougher. \"China The big picture: A lopsided economyThe imbalance between booming exports and collapsing consumption is becoming untenable:* Retail sales growth has now slowed for six consecutive months, the longest streak since 2020, according to the Wall Street Journal.* Despite $1 trillion in exports, China\u2019s domestic economy is stuck in low-gear recovery, with consumer sentiment still shaken by years of lockdowns and a deteriorating property market.* Singles\u2019 Day, China\u2019s Black Friday, ran for five weeks this year. Even that failed to excite cautious spenders.\u201cNovember data point to broad-based weakness in domestic activity,\u201d said Zichun Huang of Capital Economics. \u201cPolicy support should help drive a partial recovery\u2026 but this probably won\u2019t prevent China\u2019s growth from remaining weak across 2026.\u201dBloomberg noted that November\u2019s 1.3% retail sales growth missed every estimate in its analyst survey. <\/p>\n

Indeed, China\u2019s surplus is more a problem for itself than for the rest of the world. It is the only big country where inflation looks dangerously low. Hiring is weak, consumers lack confidence, and the property market has entered the fifth year of a seemingly intractable slump. The central bank is worried that lower interest rates will hurt banks\u2019 margins. And the government is reluctant to do whatever it takes to turn things round.<\/p>\n

An article in the Economist<\/p>\n

Zoom in: The property crisis is the epicenterAt the center of China\u2019s consumption problem sits its property market, which for decades doubled as both a growth engine and a savings account. Roughly 70% of household wealth is tied up in real estate, according to estimates cited by the International Monetary Fund.That wealth is still shrinking.New home prices fell further in November, and property investment dropped 15.9% in the first eleven months of the year, widening from earlier declines. Fixed-asset investment overall fell 2.6% over the same period, one of the sharpest pullbacks on record, according to official data cited by Reuters, Bloomberg, and the Wall Street Journal.The trouble is no longer confined to weaker developers. China Vanke, long seen as relatively stable and backed by state-linked lenders, plans to hold another bondholder meeting this week after investors rejected a proposal to delay repayment on an onshore bond. The company is now racing against the clock during the bond\u2019s grace period, according to Reuters.\u201cDevelopers are struggling to convince investors there are buyers for their apartments,\u201d said Fu Linghui, NBS spokesperson. \u201cEven discounted units remain unsold.\u201dThe IMF has warned that repairing the sector could cost the equivalent of 5% of GDP over the next three years. But even that figure understates the psychological damage. Unsold apartments, discounted units, and half-finished developments have turned housing from a source of security into a reminder of risk.Between the lines: Xi Jinping is worried about fake growthAt last week\u2019s Central Economic Work Conference, President Xi Jinping issued a rare rebuke of GDP-chasing and inflated local data, warning that \u201creckless\u201d projects and overbuilt industrial zones are wasting resources and distorting progress, a Bloomberg report said.\u201cAll plans must be based on facts,\u201d Xi said. \u201cThose who act recklessly without regard for reality must be held strictly accountable.\u201dHis call for \u201chigh-quality, sustainable development\u201d was widely seen as a rebuke of the decades-long model that emphasized GDP at any cost – often backed by wasteful borrowing and inflated statistics.Yet the contradiction is stark:* Xi demands quality growth,* But local officials remain judged on quantity,* While global demand for Chinese goods is starting to fade under rising tariffs. \"China Growing trade headwindsWhile exports saved China\u2019s 2025 performance, protectionism is spreading fast – and the backlash is now global, not just from Washington.* French President Emmanuel Macron warned of tariffs and called China\u2019s trade practices \u201cunsustainable.\u201d* Mexico approved new tariffs of up to 50% on Chinese imports starting next year to protect local manufacturers.* US and European leaders continue to pressure China over industrial overcapacity and export dumping, particularly in clean energy and EVs.\u201cChina is too large to rely on exports for growth,\u201d IMF Managing Director Kristalina Georgieva warned last week.The outlook: More of the same – for nowDespite warnings, no aggressive new stimulus appears imminent.* The People\u2019s Bank of China is expected to cut interest rates moderately in early 2026.* The government may repeat a 4% budget deficit, per economists cited by Bloomberg.* Leaders pledged a \u201cproactive fiscal policy,\u201d but specifics are scarce.China\u2019s 30-year bond futures have slumped to their lowest levels since 2024, and stock markets remain under pressure. The Hang Seng China Enterprises Index is down 1.3% amid renewed real estate fears.Still, the 5% growth target for 2026 – seen as politically important – remains in place, likely buoyed by modest stimulus and base effects. <\/p>\n

China has become dependent on the spending of foreigners to stabilise its own economy. It is not being anti-social. But it is being unwise.<\/p>\n

The Economist<\/p>\n

The bottom lineFor now, China is still likely to hit its growth target of around 5% this year. Most economists expect Beijing to set a similar target for 2026, along with a fiscal stimulus package roughly the same size as this year\u2019s.But confidence in the medium-term outlook is fading.\u201cNovember data point to a broad-based weakness in domestic activity, largely due to a pull-back in fiscal spending,\u201d said Zichun Huang, China economist at Capital Economics. \u201cPolicy support should help drive a partial recovery in the coming months, but this probably won\u2019t avert China\u2019s growth from remaining weak across 2026 as a whole.\u201dGary Ng, senior economist at Natixis, was more blunt in comments cited by Bloomberg. \u201cWhile a 5% real growth target is likely a done deal, 2026 will be a much more challenging year if the stress persists,\u201d he said.China\u2019s economy is not collapsing. It is stalling in a more subtle, more politically uncomfortable way. The factories still run. The ships still leave port. But inside the country, households remain cautious, investors hesitant, and policymakers caught between old instincts and new constraints.(With inputs from the agencies)<\/p>\n","protected":false},"excerpt":{"rendered":"TL;DR: Driving the newsChina\u2019s economic engine sputtered hard in November, with retail sales rising just 1.3% – the…\n","protected":false},"author":2,"featured_media":319614,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,18343,104132,107245,1294,126370,56,54,55,126371],"class_list":["post-319613","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-china-economy","tag-chinese-exports","tag-economic-slowdown","tag-economy","tag-real-estate-crisis","tag-uk","tag-united-kingdom","tag-unitedkingdom","tag-xi-jinping-growth-model"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/319613","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=319613"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/319613\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/319614"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=319613"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=319613"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=319613"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}