China’s economic growth slowed significantly in the second quarter of 2024, prompting concerns and increasing pressure for more stimulus measures. The world’s second-largest economy expanded by 4.7% in April-June, falling short of analyst expectations and marking a slowdown from the previous quarter’s 5.3% growth.
The disappointing performance can be attributed to a confluence of factors, with weak consumer spending playing a key role. A deepening property crisis, characterized by falling home prices, has eroded consumer confidence and dampened spending. The property downturn has also impacted local government finances, further exacerbating the economic slowdown.
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Adding to the challenges, rising trade tensions threaten to further dampen growth. While exports have provided some support, the trade environment is increasingly uncertain.
To address the economic slowdown and achieve its 5% growth target for 2024, the Chinese government is expected to focus on debt reduction and boosting confidence. This may involve additional stimulus measures, including potential cuts to interest rates and reserve requirements for banks.
However, the effectiveness and long-term impact of these measures remain uncertain. The combination of weak consumer spending, the ongoing property crisis, and rising trade tensions highlights the significant challenges facing China’s economy.