Multiple bad news emerged, particularly economic issues, which might ruin Beijing’s joyful moment, just one day before its 20th National Congress of the Chinese Communist Party.
Investors might feel concerned due to the stock market’s underperformance as Bloomberg reported that China’s blue-chip CSI 300 Index has been declining 22% this year. The Shanghai Composite Index fell more than 5% last month, the worst pre-Congress since it first recorded the benchmark in 1991.
In September, Hong Kong-listed Chinese stocks dropped sharply to record lows, down by 14%, and ranked as the worst performer among any major global equity benchmark.
Its currency is not doing well, either. The yuan depreciated about 12% this year against the dollar, heading for the worst year since 1994.
In the tech sector, the news is not any better when the U.S. just unveiled one of the most strict restrictions on chip export controls to China. The restrictions aim to curb exports of chips used in artificial intelligence and supercomputing that the regime exploits to build its own chip industry and enhance its military.
The move might ruin its ambition to dominate the semiconductor race with the U.S. As a result, stocks of some Chinese chip makers plummeted as much as 20% on the day the ban was announced.
Experts see the most severe economic problem causing headaches to the regime’s top leadership is its ongoing property crisis. The real estate sector has shown no sign of recovery despite rescue efforts from Beijing. The latest data shows that China’s new home sales plunged nearly 40% from a year ago during the National Day break.
According to experts, its controversial zero-COVID policy plays a major part in the country’s economic downturn.
Despite strict COVID restrictions hurting its economy, there will be no sign of easing. Last week, Chinese state media, People’s Daily, warned three days in a row that it persists with the zero-COVID policy. It claims that the policy stabilizes the country’s economy and protects lives.
The International Monetary Fund on Tuesday, October 11, cut China’s growth projections for 2022 to 3.2%, citing the damage hit by frequent lockdowns. The World Bank in late September also lowered China’s forecast growth for this year to 2.8%, down from 5% in April.