China’s Economic Struggles Despite 75th Foundation Day Celebrations
China recently celebrated the 75th anniversary of its foundation, but the country is facing significant economic challenges. The youth are struggling to find jobs, white-collar workers are experiencing pay cuts and layoffs, and entrepreneurs are finding it hard to keep their businesses running. Middle-class families are seeing their wealth decrease due to falling housing prices, and the wealthy are moving their money out of the country.
Last week, after months of poor economic data, Chinese President Xi Jinping approved a stimulus package to boost confidence in the economy. The central bank introduced measures to counter falling prices, including allowing commercial banks to lend more money and making it cheaper for households and companies to borrow loans.
Economist Xu Tianchen noted the urgency of these measures, while Logan Wright from Rhodium Group pointed out that stimulating the stock market won’t significantly impact the real economy. Chinese households have lost an estimated USD 18 trillion in wealth due to the housing market downturn, equivalent to each three-person household losing around USD 60,000.
Wright emphasized that China’s investment-led growth model has reached a dead end and that fundamental changes, such as income redistribution and greater transfers to households, are needed for sustainable growth.
Doubts Revealed
Foundation Day -: Foundation Day is like a birthday for a country. It marks the day when the country was officially formed or started.
Economic challenges -: Economic challenges mean problems related to money and jobs in a country. It can include things like people not having jobs or businesses not doing well.
Youth unemployment -: Youth unemployment means that young people, like those who just finished school or college, can’t find jobs.
Stimulus package -: A stimulus package is a plan by the government to spend money to help the economy. It’s like giving the economy a boost to make it better.
Investment-led growth -: Investment-led growth means the economy grows because people and businesses are putting money into new projects and businesses. It’s like planting seeds to grow more plants.
Sustainable growth -: Sustainable growth means the economy grows in a way that can keep going for a long time without causing problems. It’s like making sure a plant keeps growing by giving it enough water and sunlight.
