China’s economy continues to demonstrate resilience despite recent fluctuations in its property and A-share stock markets. According to Liu Yangsheng, a senior fellow at the Taihe Institute, these market adjustments are part of China’s transition to a new phase of economic development.
Property Market Adjustments
Liu acknowledges that China’s property market is undergoing significant corrections due to over-leverage and over-extension over the past two decades. He explains that while the property sector will remain important, its role is evolving. “There has been too much leverage, too much over-extension in the property market… It’s brought a lot of wealth to people, and it also has brought a lot of gearing, which can cause problems,” Liu notes.
He emphasizes that the housing market will shift from being a major income source for local governments to focusing on providing housing for living rather than for speculation. This change requires local governments to seek alternative revenue sources, as the previous model of selling land to developers becomes less sustainable.
Manufacturing Strength and Global Trade
Liu highlights China’s position as a global manufacturing powerhouse. “It is basically the most sophisticated supply chain for manufacturing in the world today, probably the most sophisticated in human history,” he says. China’s comprehensive industrial sectors and efficient production capabilities make it a crucial player in the global economy.
Despite reports of foreign capital outflows from China’s A-share market, Liu points out that investments from Europe and the Middle East are on the rise. He cites significant foreign direct investment from Germany and increased investments from countries like Saudi Arabia, the United Arab Emirates, Qatar, and Kuwait.
Trade dynamics are also shifting, with ASEAN countries now being China’s top trading partners. This regional integration strengthens supply chains and promotes good neighborly relations. Liu remarks, “The trade between China and ASEAN has become number one among Chinese trading partners. It used to be the U.S., then it was the EU, and now it is the ASEAN countries.”
Meeting Economic Targets Amid Global Challenges
Addressing concerns about China meeting its GDP growth target of around 5 percent, Liu advises considering the global economic context. He notes that downturns in Europe and inflation in the United States impact China’s export demands. However, he remains confident in China’s economic outlook due to its ongoing technological advancements and efficient production.
Liu concludes that China’s economy will “continue to be productive and efficiently productive,” adapting to new global market conditions and maintaining its influential role in international trade and manufacturing.
Reference(s):
cgtn.com
