Three years of zero-COVID and a lingering property crisis have taken a toll. Despite better-than-expected growth in retail sales and industrial profits in August, the outlook is far from bright. Economists have downgraded their forecasts for 2022, with some predicting growth as low as 2.7 percent. In late-September, the yuan hit a 14-year low, posing another blow to the economy and sending the Central Bank scrambling to stabilize the currency.
For China’s young people, the sluggish economy has been particularly devastating: One in five 16-to-24-year-olds in urban areas are now unemployed. With export slowdowns, migrant workers have been dealing with factory shutdowns: August marked the fifth straight month of manufacturing job loss. Tourism is down even by pandemic levels, with revenue from the Mid-Autumn Festival dipping more than 20 percent compared to last year. With a government “guidance” of 5.5 percent growth, Beijing seems keen to reverse course. In September, China’s National Development and Reform Commission announced a slew of policies aimed to catalyze economic growth by providing speedier infrastructure investments, while the central bank sought to strengthen the yuan through new regulations.
What are the prospects for an economic turnaround in the coming months? And if it doesn’t come to pass, what will a slowing economy spell for the Party’s longer-term ambitions?