According to Liu Yuhui, a Professor at the Institute of Economics, Chinese Academy of Social Sciences, China’s economy has fallen into recession.

“In a word, the current economic situation in China is that deflation has begun, and the economy has fallen into the recession,” Liu wrote in an article published recently. The following summarizes his view on the issue of debts.

In the previous 15 months, China’s M2 has increased by more than 40 trillion. But it has not stopped the economy from sliding into deflation.

There are 1.4 billion people in China. According to the statistics of China’s central bank, 700 million people are now in debt. If children and older people are excluded, almost everyone in the country is in debt.

The total debt of the household sector accounts for as much as 137.9 percent of its disposable income, and the debt ratio of American households is about 90 percent in the same period. There is a more than 40 percentage points gap between China and the United States.

The ability of households to pay is constrained significantly. The annual interest payment accounts for nearly 15% of disposable income to cope with such debts. In the same period in the United States, this figure was 7%. From January to February 2023, the total amount of credit in China’s household sector was only 290 billion, less than 300 billion.

The high debt ratio of 137.9 percent today is much worse than the below 80 percent in 2015. This radio doubled in seven years. As a result, the ability and willingness to spend and borrow in the entire economy are rapidly collapsing.

Liu believed a breakthrough leading to China’s economic recovery in 2023 is indeed difficult.

Source: iNewsDB, April 12, 2023
https://bit.ly/3UJVnew

Radio France Internationale (RFI) Chinese Edition recently reported that, since December, large delegations of officials from across China have already made hundreds of visits to Asia and Europe. Local governments have been scrambling to meet growth and employment targets. According to three sources, local officials, along with their municipal and provincial supervisors and local businesses, have been traveling abroad more than ever before. The Chinese economy has paid a huge price due to China’s strict Zero Covid policy. After three years behind closed borders, officials have traveled to Hong Kong, Paris and the like within days of the restrictions being lifted. Their urgency underscores the pressure on local governments to boost growth while saddled with a cumulative US$9 trillion in debt. A video that was posted online by the government of the eastern province of Jiangsu showed a 200-member Chinese delegation even chanting slogans like “grab new orders” as they boarded a private jet bound for Europe at 1 am. Just two days after China abruptly lifted the Zero Covid restrictions, that delegation alone was said to be scheduled to hold more than 230 business meetings in Europe. Wuxi, which is close to the commercial center of Shanghai, held 85 signing ceremonies during a 7-day trip to Hong Kong, Macau and Shenzhen, with a total transaction value of RMB 156 billion yuan (around US$22.7 billion). However, many foreign investors are still complaining about the unfair playing field, intellectual property theft and unpredictable rules for overseas companies.

Source: RFI Chinese, April 7, 2023
https://bit.ly/3KFecLp

On March 31, The Paper, a Chinese media outlet, reported that the six major economic provinces in China, namely Guangdong, Jiangsu, Zhejiang, Shandong, Henan, and Sichuan, which are also major population provinces, experienced a decrease in the number of births last year. In fact, Shandong and Henan even reported negative population growth.

China’s National Bureau of Statistics reported in January that there were 9.56 million new births last year, which is 1.06 million fewer than in 2021. This marks the first negative growth in 61 years.

The six large provinces saw varying degrees of decreasing birth rates, with Guangdong, the most economically developed and most populous province, experiencing the largest decrease of 131,100 births.

These six provinces collectively have a population of about 562 million, accounting for nearly 40% of China’s total population. While Guangdong and Zhejiang registered a slight positive population growth rate of only 0.04 per thousand, the remaining four provinces showed negative population growth.

Source: The Paper, March 31, 2023
https://www.thepaper.cn/newsDetail_forward_22527853