Export flood fails to bail out China’s sinking economy
‘Weakening across the board describes the disappointing numbers’ released by the Bureau of Statistics
Even China’s official economic numbers are bad. Not even a record-breaking US$1 trillion trade surplus this year can hide the challenges Beijing faces in 2026. Heavy state subsidies on ultra-cheap electric vehicles and smart tech products will only take you so far.
Unless President Xi Jinping’s regime addresses shrinking domestic demand and an unemployment crisis, the data will continue to fall like the winter snow. There is no quick fix to the fundamental problems plaguing the world’s second-largest economy.
“Weakening across the board describes the disappointing economic numbers from China [last week]. Probably most worrying is the drop in retail sales,” Dexter Roberts, of the Atlantic Council’s Global China Hub, wrote in his Trade War newsletter over the weekend.
“The one part of the economy that has until now held up is exports. But that is not sustainable. Instead, there will be increasing pushback from countries around the world that are being flooded by Chinese electric vehicles, solar panels, and electronics,” he added.
More than $18 trillion in household wealth has evaporated.
Deutsche Welle
Behind the news:
- Retail sales shrunk to levels not seen since 2022, the National Bureau of Statistics stated.
- Remember, China only officially lifted its nationwide Covid-19 lockdown a year later.
- As for the figures, they edged up by 1.3% in November, slowing from 2.9% in October.
Delve deeper: In short, the economy is in a mess. Unemployment is rising, wages are stagnating, and consumer confidence has “evaporated” despite stimulus measures. As for the crucial property sector, it has collapsed, leaving local governments wading in rivers of debt.
Between the lines: “According to Barclays, a major British bank, more than $18 trillion in household wealth has evaporated after home values collapsed,” Deutsche Welle reported.
Bottom line: “Construction activity – once a key driver – has slumped so badly that it now drags overall GDP below Beijing’s targets,” the German media group stated last week.
Big picture: Spooked by the meltdown, Beijing has ordered a real estate blackout to hide the scale of the disaster by curbing “independent reporting of property figures.” China’s banks are also feeling the fallout.
China Factor comment: To cope with a crisis that has dragged on for four years, Xi has pursued a predatory export push to fill coffers ravaged by the property crash. Europe and the rest of the West need to wake up while there are still markets left worth protecting.