![Pinterest](https://pinterest.com/pin/create/button/?url=https://uknews.evprotec.com/is-chinas-economy-a-ticking-time-bomb/&media=https://uknews.evprotec.com/wp-content/uploads/2023/08/130917412_gettyimages-1627556792.jpg&description=Image source, Getty Images Image caption, China's post-Covid recovery has been slow The past six months has brought a stream of bad news for China's economy: slow growth, record youth unemployment, low foreign investment, weak exports and currency, and a property sector in crisis. US President Joe Biden described the world's second-largest economy as "a ticking time bomb", predicting growing discontent in the country. China's leader Xi Jinping hit back, defending the "strong resilience, tremendous potential and great vitality" of the economy. So who is right - Mr Biden or Mr Xi? As is often the case, the answer probably lies somewhere in between. While the economy is unlikely to implode any time soon, China faces huge, deep-rooted challenges. Central to China's economic problems is its property market. Until recently, real estate accounted for a third of its entire wealth. "This made no sense. No sense at all," says Antonio Fatas, professor of economics at the business school INSEAD in Singapore. For two decades, the sector boomed as developers rode a wave of privatisation. But crisis struck in 2020. A global pandemic and a shrinking population at home are not good ingredients for a programme of relentless housebuilding. The government, fearing a US-style 2008 meltdown, then put limits on how much developers could borrow. Soon they owed billions they could not pay back. Now demand for houses has slumped and property prices have plunged. This has made Chinese homeowners - emerging from three years of tough coronavirus restrictions - poorer. "In China, property is effectively your savings," says Alicia Garcia-Herrero, chief Asia economist at wealth management firm Natixis. "Until recently, it seemed better than putting your money into the crazy stock market or a bank account with low interest rates" It means that, unlike in Western countries, there has been no post-pandemic spending boom or major economic bounce back. Image source, Getty Images Image caption, China's){kind=link}
The past six months has brought a stream of bad news for China’s economy: slow growth, record youth unemployment, low foreign investment, weak exports and currency, and a property sector in crisis.
US President Joe Biden described the world’s second-largest economy as “a ticking time bomb”, predicting growing discontent in the country.
China’s leader Xi Jinping hit back, defending the “strong resilience, tremendous potential and great vitality” of the economy.
So who is right – Mr Biden or Mr Xi? As is often the case, the answer probably lies somewhere in between.
While the economy is unlikely to implode any time soon, China faces huge, deep-rooted challenges.