China’s Economic CRASH: Why it’s happening i? Why It poses the largest risk to the world economy?
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China’s Economic CRASH Data
The current situation is showing that Economic data goes In contrast to expectations, which called for a 5% increase over the prior year in retail sales, the actual figure was 2.7%, which was a significant miss. However, it’s also lower than the 3.1% growth that we saw in June, even though retail. Retail sales are a crucial indicator of consumer confidence, so the fact that they are down indicates that Chinese consumers are not very confident. China’s was hoping that the economy will be able to have a push up words in the international demands so that exports will rebound by the end of July. Those numbers were also soft; they came in at 3.8% for July, moving up from the expectations of 4.5% and the previous two numbers, which came in at 3.5% and 3.8% respectively. Factory output and exports are two of the main engines of China’s economic growth.
China’s Real Estate
According to most estimates, real estate accounts for anywhere between 20 and 30% of China’s GDP; in any case, it appears that things haven’t been getting any better in this already underdeveloped sector. Real estate is, of course, another really important aspect of China’s economic growth. In just one month, the average price of a brand-new home dropped by 1.67% across 17 major cities. This was an even bigger drop in June, when it fell 1.9% month on month, marking the 11th consecutive month of declines. Hopes that the government’s planned infrastructure drive would help to lift these numbers, but it fell short of the forecasts as fixed-asset investment slowed in July to a weak 5.7% increase year-over-year and even lower in the prior months.
China’s Unemployment
Another worrying statistic was the record 19.9% youth unemployment rate among those between the ages of 15 and 24. When we combine all of this information, we can see that China is really in difficulty. People in China feel impoverished because their earnings are low even if they have jobs, and what’s even more surprising is that the official statistics—which are those that the Chinese government agencies themselves publish—indicate that things may be considerably worse. The People’s Bank of China’s unexpected decision to slash interest rates last week was one of the clearest indications of how difficult conditions are becoming for the Chinese economy. This happens as other central banks around the world have started the cycle of raising rates by 10 basis points. I’m sure Xi Jinping isn’t happy that China’s objective of achieving 5.5% GDP this year seems like a dream.
China’s Economic CRASH
China’s Economic CRASHAt the moment, one of the biggest problems for the Chinese economy is the real estate market, which could lead to a much bigger economic crash. Despite the country’s economic growth over the previous 14 years. When it comes to the real estate market, for example, if we compare the average cost of home ownership to the median income, China is off the charts. The majority of Chinese people have been pumping their money, making this the best investment possible. Due to this unending demand, some Chinese property developers grew into some of the biggest companies in China and the rest of the world as the country modernized and grew rapidly. Companies like Evergrande, and Country Garden with the demand for these houses that they would even sell them off plan before a single beam would be placed. They would make money by developing pricey estates, and they would frequently take on a great amount of debt to do so. Some estimates, that to finance these projects, which included offshore bonds, made Evergrande one of the most indebted companies in the world, owing over $300 billion. However, the most troubling aspect of all of this was a commercial paper list that took the form of IOUs that Evergrande and other developers issued to contractors and other businesses in the construction supply chain, which are used with a view as rock-solid. Now with the unemployment at 19% the economy slowing down Covid nobody is buying property anymore creating a big collapse in real estate. Are those the reason why China is so aggressive lately???
Conclusion
We can’t predict what the future is going to be, but the situation in China is very tense at the moment. As we mention before the Real estate business is not going well which was one of the big GDP. Unemployment at 19% (Age group 16-24) and the export slowing down puts pressure on Xi Jinping and the Chinese people.
What this has to do with Crypto??
Really simple if China goes down the economy will go too and with that Cryptocurrency. That is why we are keeping looking at the economy to help you see things ahead and make the right investment. We will keep you up to date whit everything Crypto relate & Guide you in the right direction.
Author: Francesco la Rocca
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