China's Data

In August, the most talked about issue by the global markets was the Chinese data.

Whole world now knows very well what can happen when things go wrong in China. That's why China data is carefully analyzed by both the real sector and the financial sector. We have prepared this month's newsletter to be a collective data source about China.

First of all, the first issue that has become a serious problem is the decrease in the youth population.

The Chinese population is aging, and things are not going well for the youth in the country.

The unemployment rate for China's young people ages 16 to 24 climbed to a new record high in June of 21.3%. Chinese authorities, which the whole world doubts about the accuracy of their data, stated that they will no longer announce the youth unemployment rate. That statement, "I wonder if things are worse?" evokes the idea.

Youth unemployment has remained persistently high over the last three years, the primary reason for high youth unemployment is insufficient demand from businesses.

Surveys show that employers (especially manufacturers) have very low hiring plans due to slowing growth and future uncertainty.

China’s economy grew faster than expected, thanks to the country’s abrupt exit from covid-19 controls. Then, in April and May, the opposite happened.?

In addition;

• China’s official target is for growth of around 5% this year. But growth for 2023 will look closer to 3% Bloomberg Economics said.?
• GDP grew at a slower-than-expected pace of 5.5% in the first half of the year compared with a year earlier.
• Consumer spending growth weakened markedly, and real estate investments contracted.
• Trade has been declining and, in July, China slid into deflation, signaling a worsening outlook for the economy.

There is a plethora of western commentary about the risks of the “Japanification” of China’s economy. The recent history of the Chinese economy coincides very well with Japan and even South Korea. Styles are the same in all three countries, the take-off phase is driven by rapid, export-led industrialization and low-cost labor.

The current problems of the three countries are the same. Aging and declining population!

Japan suffered from decades of economic stagnation after the collapse of a massive asset bubble in the early 1990s. Although not exactly the same, China seems to have entered the same process right now. For this reason, many analyzes comparing Japan and China have been made recently.

The economy of the world's factory has hit a rough patch. For many years, the country had enjoyed rapid growth and ever-rising living standards, but even before the pandemic hit, the economy appeared to be losing steam.?

China is the world’s second biggest economy – just like Japan once – and has grown at a stupendous pace over the past four decades and has generated 41% of the world’s growth in the past 10 years.

China has a unique economy combining free market policies and large scale foreign direct investment with heavy state control. Internationally, China is building on its economic ties with developing countries through infrastructure and development projects such as the Belt and Road Initiative, the BRICS alliance, and loans, often capitalizing on anti-Western sentiments by providing an alternative source of capital. Both China and the U.S. are each other’s largest trading partners, and the economic stability of both countries is dependent on future cooperation.

Every country may have periods of depression, although some countries such as the Soviet Union end these periods with collapse, we do not foresee a similar collapse for China, at least for now.