The upshot from China’s slowing economy
A swift post-pandemic recovery for the world’s second-largest economy hasn’t materialised. But there could be a silver lining.
After China tore down the shackles of its interminable zero-COVID restrictions late last year there was a widespread belief that its faltering economy would do what it has tended to do over the past two decades: snap quickly back to life and drive global growth. Some eight months on, the reality is proving much more difficult.
A deepening housing slump is fanning fears of contagion, and adds to wider concerns from slumping consumer confidence and weak exports. Country Garden, once the country's biggest property developer, today warned it may default on its debt and raised doubts over its ability to remain a going concern after reporting a record $10 billion first-half loss.
China has long been a key engine of global economic growth, its strength proving pivotal in driving recovery from previous global downturns. At risk of stating the obvious, a severe China slowdown will impact the rest of the world — Joe Biden evoked a “ticking time bomb” — not least Australia.
“There's significant concern about the health of the Chinese economy, and, if growth were to be much lower than their target, that would have implications,” Reserve Bank governor Philip Lowe said earlier this month, highlighting China as the biggest risk to the world economy alongside the global fight to contain inflation.
