While the Chinese Communist Party has launched propaganda to build momentum for its leader Xi Jinping’s re-election, economists are concerned that China’s economy is heading for a full-blown recession.

The world’s second largest economy has been deteriorating over recent years after maintaining a solid growth rate for decades.

Data from the World Bank shows that China’s economic growth rate has gradually declined from 7.9% in 2012 to 6.8% in 2016, and to 6% in 2019.

But with the outbreak of the COVID-19, China is forecast to grow just around 3% in 2022, lower than elsewhere in Asia for the first time in the past 30 years.

In the second quarter of this year, the economy expanded just 0.4% year-on-year, well below the government’s annual growth target of around 5.5%. 

Xie Tian is a professor of marketing at the University of South Carolina-Aiken. According to his analysis, China’s economic structure has been deformed.

Xie explained that China has focused too much on infrastructure. Chinese interest groups have made a lot of money, but real estate sales are basically about half at the moment.

China’s real estate market contributed about a quarter of economic output over the past decade, but it is collapsing now. 

The professor said that sales of properties in Beijing and Shanghai are also declining though there is always demand in such first-tier cities. It indicates that the Chinese economy is losing momentum.

Xie pointed out that China relies too much on borrowing for development. The overall debt, or the combined debt of the regime and private enterprises, may reach 300-350%. That is a very high figure.

Economists also said that China’s rapid deterioration, caused by the recent “zero-Covid” policy, is surprising the world.

Hong Hao, chief economist of China’s hedge fund GROW Investment Group, said that China’s economy will not be able to escape the fate of “very low-speed growth” in the next 10 years.

Hong said that 2% growth per year is still too optimistic.

Anthony Saich is director of John Kennedy School of Government, Harvard University. He said that after China lost the support of infrastructure investment, its economy may decline faster than most people think.

He predicted that China’s future GDP annual growth will be about 2% to 3%.

Xie said that the speed of recession, the deterioration of the economic system, and the bursting of the real estate bubble in China really surprised the whole world.

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