Chinas Looking Frail Next To Hale and Hearty Neighbors

Image source: patrimonio designs ltd, TPYXA_ILLUSTRATION, Ink Drop - Shutterstock

What's going on?

Projections out on Tuesday suggested that Chinas growth will fall behind the rest of Asia for the first time in over three decades.

What does this mean?

In the immediate wake of Covid, China seemed to be at the forefront of the worlds recovery from the pandemic. But a lot has changed since then: the countrys strict zero-Covid approach which depends on snap lockdowns and mass testing has restricted movement and left consumer activity pretty depressed. And when you consider too that Chinas all-important property sector which makes up about 30% of the economy is taking a worse bruising than Olivia Wildes “Don’t Worry Darling”, its no wonder the World Bank now predicts the Chinese economy will grow just 2.8% this year. For the rest of Asia, though, things look comparatively rosy: high commodity prices (good news for exporters) and a strong rebound in domestic demand mean it’s expected to grow by a healthy 5.3% this year.

Why should I care?

Zooming in: The worlds watching its wallet.
Chinas woes dont end there. You see, with recession fears (and in some cases, actual, full-blown recessions) setting in, Chinas exports are taking a hit. Thats worrying for a country that typically relies on exports to fuel growth, but the numbers dont lie: Shanghais port processed 8% less cargo this August compared to last August a dropoff thats contributed to plunging shipping costs from China, which are now at their lowest in over two years (tweet this).

The bigger picture: A silver lining for everyone else.
Its a dog-eat-dog world out there, and Chinas difficulties present the countrys trading partners with plenty of opportunities specifically the countries China exports to. See, falling demand should ease some of the congestion thats been plaguing global supply chains, while lower shipping costs could help to cool inflation globally too.

Originally posted as part of the Finimize daily email.

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