collapsed in the past few years<\/a>, wiping out savings and pushing consumers to spend less and save more.<\/p>\n\u201cChinese consumers have been forced to tie their wealth to property,\u201d said Juliet Lu, assistant professor in the School of Public Policy and Global Affairs at the University of British Columbia, a sector that had been built up on speculative investments and saw massive losses in the past few years.<\/p>\n
\u201cBetween that and the losses that occurred during the COVID-19 pandemic, people became very conservative in spending, Lu said.<\/p>\n
\u201cOrdinary Chinese citizens have been squeezed. Cheap goods and exports come at the expense of Chinese workers,\u201d she said.<\/p>\n
\u2018Job creation is lagging\u2019<\/p>\n
Reza Hasmath, academic faculty adviser at The China Institute at the University of Alberta, agreed.<\/p>\n
While \u201cthe export engine is running very hot\u201d and most of the economy is being led by that, the domestic side is a different story as \u201cjob creation is lagging and this will create problems for Beijing\u201d, Hasmath told Al Jazeera.<\/p>\n
He added, \u201cWe see the young generation \u2013 under age 25 \u2013 their prospects of meaningful employment decreasing. They will be underemployed or unemployed, their incomes depressed. This cohort is taking a brunt of the economic issues.\u201d<\/p>\n
Hasmath warns that things will worsen if the country continues on its current trajectory of a technology exports-led boom rather than domestic growth.<\/p>\n
\u201cThen you\u2019ll see the rest of the age cohort feeling it as well.\u201d<\/p>\n
The Chinese government\u2019s social contract used to be that\u00a0you\u2019ll get wealthy in China, Hasmath said. \u201cNow you can see the social contract changing with campaigns [spreading a message] that it\u2019s essential to give back to society and don\u2019t expect to get wealthier.\u201d<\/p>\n
But economists are not necessarily expecting a major fiscal stimulus from Beijing, either.<\/p>\n
\u201cThe government is interested in paying down debt more than spending,\u201d said Mark Kruger, an economist affiliated with think tanks including the Centre for International Governance Innovation and the Yicai Institute, and who is now based in Shanghai.<\/p>\n
\u201cMy sense is the government is not going to panic here,\u201d as its average GDP growth so far this year is 4.7 percent and that\u2019s within its range of annual growth of 4.5 percent to 5 percent, said Kruger.<\/p>\n
\u201cData goes up and data goes down.\u201d<\/p>\n
Oil imports<\/p>\n
The drop in economic growth also comes against a backdrop of the United States and Israel\u2019s war on Iran and Tehran\u2019s retaliation on energy sites of US allies in the region, and the closure of the Strait of Hormuz through which a fifth of global oil supplies typically pass, including to China, a significant importer.<\/p>\n
\u201cOne of the big things that helped stabilise the global economy was that Chinese imports of oil dropped,\u201d during the past few months as it dipped into its reserves, said Rachel Ziemba, senior adjunct fellow at the Center for a New American Security.<\/p>\n
\u201cBut now it\u2019s starting the third quarter with oil supplies again disrupted. The question is how will China\u2019s role in the supply chain manifest,\u201d said Ziemba, as pricier fuel will push up inflation and reduce demand, leading to weaker growth.<\/p>\n
\u201cThat is the big thing people are watching for now, especially with the Strait of Hormuz again mostly closed.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"China\u2019s economy slowed sharply in the quarter ending June, revealing vulnerabilities in the country\u2019s growth model, which is…\n","protected":false},"author":2,"featured_media":768202,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[1204,28,4868,144,101,2402,3139,5476,3,45063,145,231941],"class_list":["post-768201","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-asia-pacific","tag-business","tag-business-and-economy","tag-china","tag-economy","tag-inflation","tag-international-trade","tag-manufacturing","tag-news","tag-oil-and-gas","tag-unemployment","tag-us-israel-war-on-iran"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/768201","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=768201"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/768201\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/768202"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=768201"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=768201"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=768201"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}