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China's Economic Measures UPSC NOTE


  • China recently announced measures to boost its economy, including cuts in lending rates by major banks and reducing foreign exchange reserve requirements for institutions. 

  • These actions aim to address issues in the property sector and counter economic challenges.

  • Economic Slowdown: China's economic data indicates a slowdown, with GDP growth at 0.8% in the second quarter, projecting annual growth around 3%, which is among the weakest in the last three decades.

  • Post-Pandemic Expectations: After reopening in late 2022, there were expectations of a spending spree by Chinese consumers and increased investments by private businesses, but economic indicators by the end of the second quarter showed a different picture.

  • Export Decline: China experienced a significant decline in exports, with the July export numbers plunging by 14.5% compared to the previous year.

  • Deflation and CPI: China slipped into deflation in July, with the Consumer Price Index (CPI) falling by 0.3%, which can lead to reduced production and job layoffs.

  • Youth Unemployment: Youth unemployment reached a record high of almost 21% in June, four times the national urban rate.

  • Economic Model: China's economic model has been driven by debt-fueled investments and exports, which led to a reliance on investment (about 50% of GDP) rather than domestic consumption.

  • Property Sector Impact: China's property sector, which contributes significantly to GDP, experienced a bubble burst, leading to concerns about developers' debt levels and the ability to complete projects.

  • Evergrande Group Default: The fall of China's second-largest real estate developer, Evergrande Group, in 2021, marked a significant point in the property crisis.

  • Liquidity Crisis at Country Garden: The liquidity crisis at Country Garden, one of the largest property developers, adds to concerns in the property sector and the broader economy.

  • Government Measures: The Chinese government has taken some measures to stimulate house sales and the property sector but has not yet announced full-scale bailouts for struggling developers.

  • Global Economic Impact: China's economic slowdown is a concern because it has been a major driver of global growth, contributing 41% of the world's growth in the past decade.

  • Reduced Global Contribution: With China's growth rate declining, its contribution to global economic growth is expected to decrease significantly.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: China's Economic Measures UPSC NOTE
China's Economic Measures UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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