Excess manufacturing hurts China’s economy

Thur, 08/15/2024

by Ellie LeTu

Source: WSJ

• China’s slowing economy

  • New data from China cemented concerns over China’s struggling economy.

  • Unemployment rose, property investment fell, weak consumer spending, and GDP growth.

• China over-invested in manufacturing

  • China turbo-charged manufacturing without stimulating consumer demand, leaving companies with crippling excess supply.

  • This is pushing tons of Chinese companies to the brink, forcing them to slash prices just to get rid of their excess product.

  • Xi Jinping historically sees US consumer spending as wasteful, which is why he failed to properly boost consumer demand to meet the rising supply.

• Other countries resist buying Chinese excess

  • The US is placing increasing tariffs on Chinese goods and the EU heavily tariffs Chinese EVs.

  • India, Brazil, and Turkey are pushing back against Chinese imports.

• Pessimistic rest of year outlook

  • Chinese economists predict that China will fail to hit its 5% growth target this year.

  • China expects to be aggressive in attempting to raise consumer spending.