Chinese security monitors a checkpoint as the Communist Party’s Central Committee holds its third plenum meeting in Beijing, China, on July 15, 2024.
| Photo Credit: AP

China posted lower than expected growth in the second quarter on July 15, with all eyes on how top officials gathering for a key meeting in Beijing might seek to tackle the country’s deepening economic malaise.

The world’s second-largest economy is grappling with a real estate debt crisis, weakening consumption, and an ageing population.

Trade tensions with the United States and the European Union, which have sought to limit Beijing’s access to sensitive technology as well as putting up tariffs to protect their markets from cheap, subsidised Chinese goods, are also dragging growth down.

And on Monday, official statistics showed the economy grew by only 4.7% in the second quarter of the year. It represents the slowest rate of expansion since early 2023, when China was emerging from a crippling zero-COVID policy that strangled growth. Analysts polled by Bloomberg had expected 5.1%.

Retail sales — a key gauge of consumption — rose just two percent in June, down from 3.7% growth in May. “The external environment is intertwined and complex,” the National Bureau of Statistics said.

“Domestic effective demand remains insufficient and the foundation for sound economic recovery and growth still needs to be strengthened,” it added.

Party is planning “major” reforms: Xi

The figures came the same day that China’s ruling Communist Party kicked off a key meeting led by President Xi Jinping focussed on the economy, known as the ‘Third Plenum.’

The Chinese leader delivered a “work report” at the opening of the meeting, state news agency Xinhua said. He also “expounded on a draft decision of the CPC Central Committee on further comprehensively deepening reform and advancing Chinese modernisation”, it added. Beijing has offered few hints about what might be on the table.

Mr. Xi has said the party is planning “major” reforms. Analysts are hoping those pledges will result in badly needed support for the economy. “The four-day meeting of the country’s top governing body couldn’t come soon enough,” Harry Murphy Cruise, an economist at Moody’s Analytics, said in a note. But, he said, “while the case for reform is high, it’s unlikely to be a particularly exciting affair”.

“Instead, we expect a modest policy tweak that expands high-tech manufacturing and delivers a sprinkling of support to housing and households,” he added.

Meeting intended to long-term ideas and structural reforms

The People’s Daily, the Communist Party’s official newspaper, appeared to confirm lower expectations when it warned last week that “reform is not about changing direction and transformation is not about changing colour”.

Ting Lu, chief China economist at Nomura, said the meeting was “intended to generate and discuss big, long-term ideas and structural reforms instead of making short-term policy adjustments”.

The Third Plenum has previously been an occasion for the party’s top leadership to unveil major economic policy shifts.

In 1978, then-leader Deng Xiaoping used the meeting to announce market reforms that would put China on the path to dazzling economic growth by opening it to the world.

And more recently following the closed-door meeting in 2013, the leadership pledged to give the free market a “decisive” role in resource allocation, as well as other sweeping changes to economic and social policy.

Beijing aims for five percent growth this year

Beijing has said it is aiming for five percent growth this year — enviable for many Western countries but a far cry from the double-digit expansion that for years drove the Chinese economy.

But the economic uncertainty is also fuelling a vicious cycle that has kept consumption stubbornly low.

Among the most urgent issues facing the economy is the beleaguered property sector, which long served as a key engine for growth but is now mired in debt, with several top firms facing liquidation.

Authorities have moved in recent months to ease pressure on developers and restore confidence, including by encouraging local governments to buy up unsold homes.

Analysts say much more is required for a full rebound, as the country’s economy has yet to bounce back more than 18 months after damaging COVID-19 restrictions ended.

Workers labor in a factory of automotive aluminium wheel hubs in Binzhou city in east China’s Shandong province on May 27, 2024.

China’s manufacturing activity unexpectedly fell in May, keeping alive calls for fresh stimulus as a protracted property crisis in the world’s second-largest economy continues to weigh on business, consumer and investor confidence.

The official manufacturing purchasing managers’ index (PMI) dropped to 49.5 in May from 50.4 in April, the National Bureau of Statistics (NBS) said on Friday, below the 50-mark separating growth from contraction and missing analysts’ forecast of 50.4.

The disappointing number adds to a series of recent indicators showing the $18.6 trillion economy is struggling to get back on its feet, eroding earlier optimism seen after better-than-expected output and trade data.

“I think the data particularly reflects soft domestic demand, the housing sector continued to worsen and retail sales were not strong,” said Xu Tianchen, senior economist at the Economist Intelligence Unit. “The May reading may indicate a temporary blip. We’ll probably see an improvement in June as new government policies start to impact, such as the property rescue plan and the issuance of special sovereign bonds,” he added.

The PMI’s sub-indices for new orders and new export orders both tipped back into contraction after 2 months of growth, while employment continued to shrink.

Cautious approach: Banks are reluctant to lend to housing projects fearing more bad loans. File
| Photo Credit: Reuters

When China’s local governments began compiling a “whitelist” of housing projects for loans earlier this year, troubled developers hoped it would open a spigot of credit for a sector that remains a major stumbling block to a broad economic revival.

Four months later, new funding is only coming by the drip, reflecting the deep-seated caution about the outlook for China’s residential property market, according to Reuters interviews with bankers and developers.

Banks have been reluctant to heed Beijing’s repeated nudges to bolster credit to the embattled sector given the risks of more bad loans, further undermining confidence in the crisis-hit property market seen as crucial to shoring up a shaky economy.

New loans were only approved since late March, according to the sources, which surprised companies and investors who had expected fresh lending for developers at the start of the ‘whitelist’ programme months earlier.

The main hurdle to granting more new bank loans is the current weak property market conditions, said Lawrence Lu, managing director at S&P Global Ratings.

“Developers need to have a project in place to get funding … the issue now is whether the project can generate sufficient cash flow to repay the debt,” he said.

At least six defaulted private developers received bank approvals for new loans for “whitelist” projects since late March, according to one company statement, senior executives of two developers and two other people with knowledge of the program.

Those new loans were granted for fewer than a handful of projects and lending received so far was equivalent to hundreds of thousands of dollars per project, three of the people told Reuters.

That’s just a drop in the ocean given the vast stock of unfinished housing—a Reuters report in March estimated that the “whitelist” programme covers projects that need fresh financing of 1.5 trillion yuan.

The loans are only granted depending on the progress of construction, the three sources said, adding the volume of approval was “insignificant” given the huge number of uncompleted homes.

Frozen projects

The slow roll-out of the “whitelist” lending reflects the challenge facing Beijing which has pushed banks to speed up approvals of new loans to cash-starved private developers to complete their projects.

Under the “whitelist” mechanism launched in January, local governments nominate projects and state-owned as well as commercial banks are encouraged to provide lending. By March-end, banks had approved the equivalent of $72 billion in loans for 2,100 housing projects, state media reported.

Developers and bankers said many of these approvals restarted existing loans, rather than providing new credit.

Estimates vary widely, but analysts agree there are tens of millions of uncompleted apartments across China after a building boom turned to bust with the failure of developers. There is no public data available on the scale and terms of lending under the “whitelist” policy.

‘A bad deal’?

One of the six private developers whose projects got bank approval said it had decided to refuse the help.

“We think it’s a bad deal because financing incurs interest,” a senior executive at the developer told Reuters. “Once we use the ‘whitelist’ loans we have to complete the construction. However, we’re not able to sell all of the units under this bad market so it’s only increasing costs for us.”

Some bankers said they would continue to push back on the “whitelist” directive by negotiating with officials and explaining the shortcomings in projects.

Factory workers are seen on an assembly line at a manufacturing plant for automobile air conditioners in China. File
| Photo Credit: AP

Manufacturing in China expanded in March after contracting for five consecutive months, according to an official survey of factory managers released on March 31, suggesting a rebound in industrial activities following the Lunar New Year holiday.

The official purchasing managers index, or PMI, rose from 49.1 in February to 50.8 in March. The PMI is on a scale of 100, where 50 marks the cutoff between expansion and contraction.

The monthly manufacturing PMI has mostly been under 50 over the past 12 months: Other than this month, factory activities only recorded an expansion in September.

China’s National Bureau of Statistics senior statistician Zhao Qinghe said the market became more active as companies resumed and sped up production after the Lunar New Year holiday. Many factories stopped running during the holiday, with social media posts suggesting workers at some companies were off for as many as 140 days starting in late 2023 due to the lack of new orders.

Mr. Zhao said the survey also showed some problems for companies remained, including increasing competition in industries and a lack of market demand.

During the annual session of the National People’s Congress in March, China said it would encourage consumers to scrap old appliances and trade in their cars for electric vehicles to help spur domestic demand. And it said 10.4 billion yuan ($1.4 billion) would go to upgrading industries and modernising manufacturing.

Mr. Zhao said the policies promoting the trade-ins of consumer goods and large-scale equipment upgrades still needed further implementation to support the high-quality development of the manufacturing industry.

According to the survey released on March 31, the non-manufacturing PMI rose to 53 from 51.4 in February. The reading is the highest since June 2023.

The recovery of the world’s second-largest economy following the shocks of the Covid-19 pandemic faced many obstacles, one of the largest being a downturn in the real estate industry after authorities moved to curb excess borrowing by property developers.

The ruling Communist Party’s target is to grow the economy by about 5% this year, an ambition that economists say may be hard to attain.

More auctions in the future will distract would-be buyers from the regular market, which could weigh on prices for both new and second-hand homes. AFP
| Photo Credit: AFP

Chased by debt collectors over a mortgage delinquency in a southern Chinese city, former finance worker Lei Xiaoyu no longer answers her phone as she tries to delay the inevitable.

“It’s my only house and I don’t want it foreclosed. But what can I do?” said the 38-year-old, who in late 2022 lost her job and stopped repaying the mortgage and credit card debt she took to buy a 1.3 million yuan ($181,139) home in Huizhou.

“I feel like I wasted my youth,” she said, regretting the purchase seven years ago. The number of Chinese in Lei’s situation is small, but rising fast, as growth in the world’s second-largest economy remains patchy and fragile due to a property sector crisis, mounting local government debt and fears of deflation.

Rising mortgage delinquencies could have negative spillovers on both property prices and consumer confidence, analysts say, further complicating China’s efforts to boost household demand and bring its economy on a more solid footing. The number of foreclosed homes in China rose 43% year-on-year in 2023 to 389,000, said China Index Academy, a major independent real estate research firm. More than 50,000 other units were foreclosed in January, up 64.4% year-on-year, the firm said.

“It has a certain shrinking effect on consumption and also serves as a warning that excessive investment (in property) should be avoided,” Hwabao Trust economist Nie Wen said.

Lei is in no mood to spend money.

She made about 40,000 yuan last year selling goods via livestreaming, not enough to make any of the 4,200 yuan monthly mortgage payments and barely enough for basic living expenses.

“All the clothes I wear are from five years ago, but I’ve gained weight and many no longer fit me. My friend gave me one of her old coats. I haven’t travelled since 2017,” said Lei.

Not being able to support her mother who lives on a 3,000 yuan monthly pension upsets her the most.

More auctions coming

Data from China Index Academy showed a total of 99,000 foreclosed units were sold at auctions in 2023 for a combined 150 billion yuan.

Duan Chenglong, a manager at Beijing Xiangpaipai Information Service, a firm that specialises in foreclosures, says those auctions were the result of debt disputes two- to three-years old, meaning the trend is likely to pick up pace.

“The post-pandemic economic environment hasn’t been good, with many defaulting on their mortgages, including due to job issues,” said Duan. “There is still a gap between the volume of properties being auctioned and the amount of distressed assets.”

More auctions in the future will distract would-be buyers from the regular market, which could weigh on prices for both new and second-hand homes, Duan said.

In some cities in China, some auctions of foreclosed homes have repeatedly failed.

The ratio of mortgage-related non performing loans in the Chinese banking sector is estimated at only 0.4%, meaning lenders can tolerate writing off some of these assets.

But the failures highlight the excess housing supply built up during the boom years of the property sector, which accounted for about a quarter of economic activity at its peak in 2021.

Xin, a 30-year-old single mother from Zhumadian, in the central Henan province, lost her flat after she mortgaged it to start a child entertainment business, which failed within weeks due to COVID-19 lockdowns in 2020.

The property, valued in 2019 at 310,000 yuan, was auctioned twice in the past year for the 170,000 yuan Xin owes the bank, but failed to attract any bids.

A Chinese paramilitary police officer walks at Tiananmen Square in Beijing on March 3, 2024, ahead of the country’s annual legislative meetings known as the “Two Sessions”.
| Photo Credit: AFP

China’s annual political conclave kicks off in Beijing on March 4, with officials saying the flagging economy and youth unemployment are of “great concern” as they lay out plans for the coming year.

Armed police and public security workers are ubiquitous on Beijing streets as thousands of delegates arrive for the beginning of the annual “Two Sessions” gatherings.

Also Read |Is China’s economy in the doldrums?

Proceedings kick off Monday at 3:00 p.m. (0700 GMT) with the opening ceremony of the Chinese People’s Political Consultative Conference (CPPCC) – attended by President Xi Jinping and other party top brass – which will last until Sunday, March 10.

At a press conference on March 3, CPPCC spokesperson Liu Jieyi said that “economic topics are of great concern” to the body’s more than two thousand members.

So, too, was “the employment of young people, especially fresh graduates”, he said, with youth unemployment officially at around 15% at the end of 2023, after the statistics bureau adjusted its calculation methods.

Monday’s CPPCC is relatively low-stakes compared to the near-simultaneous gathering of the country’s legislature, the National People’s Congress (NPC).

The NPC begins on March 5 and runs until March 11, spokesperson Lou Qinjian told a press conference on Monday.

The meetings are not expected to see the unveiling of big-ticket bailouts that experts say are needed to stimulate China’s economy, which last year posted some of its lowest growth in decades.

Focus on economy

Mr. Lou on Monday struck a bullish tone, saying Beijing’s leaders had “ample confidence” that the economy would rebound.

“China has more favourable conditions than challenges in its economic development,” he insisted.

“The underlying trend of a rebound in the economy and long-term growth remains unchanged,” he said.

But, he added, Premier Li Qiang would not be holding a press conference at the end of the NPC, in a break with decades-long tradition.

Mr. Li had used the briefing last year to warn that Beijing’s modest growth goals would be “no easy task”.

China is also set to double down on national security, with analysts expecting it to increase its military budget, second only to the United States.

Beijing revised a law dramatically expanding its definition of espionage last year and conducted raids on a string of big-name consulting, research and due diligence firms.

The legislature’s top body also approved a broad and vaguely worded revision to the country’s state secrets law in the run-up to the NPC.

Lynette Ong, a professor at the University of Toronto, told AFP there would “be continued emphasis on security”.

“I don’t expect any major policy change such as important structural reforms that will change the course of economic trajectory,” she added.

On paper, the NPC wields little actual power.

All major decisions will have been made weeks before in closed-door meetings of the Communist Party, far from the international media’s cameras.

But the topics that are up for discussion and the tone of the speeches allow for key insights into what’s keeping China’s rulers up at night, analysts say.

“Balancing security with the need to keep the economy ticking over while other issues are worked out is at the centre of policymaker’s minds,” said Diana Choyleva, chief economist at Enodo Economics.

Beijing, China:

China’s annual political conclave kicks off in Beijing on Monday, with officials saying the flagging economy and youth unemployment are of “great concern” as they lay out plans for the coming year.

Armed police and public security workers are ubiquitous on Beijing streets as thousands of delegates arrive for the beginning of the annual “Two Sessions” gatherings.

Proceedings kick off Monday at 3:00 pm (0700 GMT) with the opening ceremony of the Chinese People’s Political Consultative Conference (CPPCC) — attended by President Xi Jinping and other party top brass — which will last until Sunday March 10.

At a press conference on Sunday, CPPCC spokesperson Liu Jieyi said that “economic topics are of great concern” to the body’s more than two thousand members.

So, too, was “the employment of young people, especially fresh graduates”, he said, with youth unemployment officially at around 15 percent at the end of 2023, after the statistics bureau adjusted its calculation methods.

Monday’s CPPCC is relatively low-stakes compared to the near-simultaneous gathering of the country’s legislature, the National People’s Congress (NPC).

The NPC begins on Tuesday and runs until March 11, spokesperson Lou Qinjian told a press conference on Monday.

The meetings are not expected to see the unveiling of big-ticket bailouts that experts say are needed to stimulate China’s economy, which last year posted some of its lowest growth in decades.

Focus on economy 

But Lou on Monday struck a bullish tone, saying Beijing’s leaders had “ample confidence” that the economy would rebound.

“China has more favourable conditions than challenges in its economic development,” he insisted.

“The underlying trend of a rebound in the economy and long-term growth remains unchanged,” he said.

But, he added, Premier Li Qiang would not be holding a press conference at the end of the NPC, in a break with decades-long tradition.

Li had used the briefing last year to warn that Beijing’s modest growth goals would be “no easy task”.

China is also set to double down on national security, with analysts expecting it to increase its military budget, second only to the United States.

Beijing revised a law dramatically expanding its definition of espionage last year and conducted raids on a string of big-name consulting, research and due diligence firms.

The legislature’s top body also approved a broad and vaguely worded revision to the country’s state secrets law in the run-up to the NPC.

Lynette Ong, a professor at the University of Toronto, told AFP there would “be continued emphasis on security”.

“I don’t expect any major policy change such as important structural reforms that will change the course of economic trajectory,” she added.

On paper, the NPC wields little actual power.

All major decisions will have been made weeks before in closed-door meetings of the Communist Party, far from the international media’s cameras.

But the topics that are up for discussion and the tone of the speeches allow for key insights into what’s keeping China’s rulers up at night, analysts say.

“Balancing security with the need to keep the economy ticking over while other issues are worked out is at the centre of policymaker’s minds,” said Diana Choyleva, chief economist at Enodo Economics.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

The young Chinese man looked lost and exhausted when Border Patrol agents left him at a transit station. Deng Guangsen, 28, had spent the last two months traveling to San Diego from the southern Chinese province of Guangdong, through seven countries on plane, bus and foot, including traversing Panama’s dangerous Darién Gap jungle.

“I feel nothing,” Mr. Deng said in the San Diego parking lot, insisting on using the broken English he learned from the Harry Potter film series. “I have no brother, no sister. I have nobody.”

Mr. Deng is part of a major influx of Chinese migration to the U.S. on a relatively new and perilous route that has become increasingly popular with the help of social media. Chinese people were the fourth-highest nationality, after Venezuelans, Ecuadorians and Haitians, crossing the Darién Gap during the first nine months of this year, according to Panamanian immigration authorities.

Chinese asylum-seekers, as well as observers, say they are seeking to escape an increasingly repressive political climate and bleak economic prospects.

They also reflect a broader presence of migrants at the U.S.-Mexico border — Asians, South Americans and Africans — who made September the second-highest month of illegal crossings and the U.S. government’s 2023 budget year the second-highest on record.

The pandemic and China’s COVID-19 policies, which included tight border controls, temporarily stemmed the exodus that rose dramatically in 2018 when President Xi Jinping amended the constitution to scrap the presidential term limit. Now emigration has resumed, with China’s economy struggling to rebound and youth unemployment high. The United Nations has projected China will lose 3,10,000 people through emigration this year, compared with 1,20,000 in 2012.

It has become known as runxue, or the study of running away. The term started as a way to get around censorship, using a Chinese character whose pronunciation spells like the English word “run” but means “moistening.”

‘Reflecting despair’

“This wave of emigration reflects despair toward China,” Cai Xia, editor-in-chief of the online commentary site of Yibao and a former professor at the Central Party School of the Chinese Communist Party in Beijing.

“They’ve lost hope for the future of the country,” said Ms. Cai, who now lives in the U.S. “You see among them the educated and the uneducated, white-collar workers, as well as small business owners, and those from well-off families.”

Those who can’t get a visa are finding other ways to flee the world’s most populous nation. Many are showing up at the U.S.-Mexico border to seek asylum. The Border Patrol made 22,187 arrests of Chinese for crossing the border illegally from Mexico from January through September, nearly 13 times the same period in 2022. Arrests peaked at 4,010 in September, up 70% from August. The vast majority were single adults.

The popular route to the U.S. is through Ecuador, which has no visa requirements for Chinese nationals. Migrants from China join Latin Americans there to trek north through the once-impenetrable Darién and across several Central American countries before reaching the U.S. border. The journey is well-known, and has its own name in Chinese: zouxian or walk the line.

The monthly number of Chinese migrants crossing the Darién has been rising gradually, from 913 in January to 2,588 in September. For the first nine months of this year, Panamanian immigration authorities registered 15,567 Chinese citizens crossing the Darién. By comparison, 2,005 Chinese people trekked through the rainforest in 2022, and just 376 in total from 2010 to 2021.

Short video platforms and messaging apps provide not only on-the-ground video clips but also step-by-step guides from China to the U.S., including tips on what to pack, where to find guides, how to survive the jungle, which hotels to stay at, how much to bribe police in different countries and what to do when encountering U.S. immigration officers.

Translation apps allow migrants to navigate through Central America on their own, even if they don’t speak Spanish or English. The journey can cost thousands to tens of thousands of dollars, paid for with family savings or even online loans.

It’s markedly different from the days when Chinese nationals paid smugglers, known as snakeheads, and traveled in groups.

Search for a way in

Migrants hoping to enter the U.S. at San Diego wait for agents to pick them up in an area between two border walls or in remote mountains east of the city covered with shrubs and large boulders.

Many migrants are released with court dates in cities nearest their final destination in a bottlenecked system that takes years to decide cases. Chinese migrants had an asylum grant rate of 33% in the 2022 budget year, compared with 46% for all nationalities, according to Syracuse University’s Transactional Records Access Clearing house.

Catholic Charities of San Diego uses hotels to provide shelters for migrants, including 1,223 from China in September. The average shelter stay is a day and a half among all nationalities. For Chinese visitors, it’s less than a day.

In September, 98% of U.S. border arrests of Chinese people occurred in the San Diego area.

In recent weeks, Chinese migrants have filled makeshift encampments in the California desert as they wait to turn themselves in to U.S. authorities to make asylum claims.

The World Bank has said that east Asia’s developing economies are expected to expand at one of the lowest rates in five decades, blaming the gloomy outlook to slowdown in China. The Financial Times said in a report that the World Bank cut its forecast for China’s growth next year to 4.4 per cent from the 4.8 per cent it expected in April. This is even less than the growth forecast of five per cent released by China’s policy makers.

The World Bank cited a string of weak indicators for the dismal forecast for the world’s second-biggest economy, said the Financial Times (FT) report.

The bank also downgraded its 2024 forecast for gross domestic product growth for developing economies in east Asia and the Pacific to 4.5 per cent from 4.8 per cent in the first quarter of the current financial year, the outlet further said.

This is the slowest rate of growth for one of the high performing regions of the world, except the coronavirus pandemic, the Asian financial crisis and the global oil shock in the 1970s.

“China’s rebound from strict pandemic controls was expected to be more sustained and more significant than it turned out to be,” Aaditya Mattoo, World Bank chief economist for east Asia and the Pacific, told FT.

The reasons attributed are Chinese retail sales tumbling to below pre-pandemic levels, stagnant house prices, increased household debt and lagging private sector investment.

Mr Mattoo said in order to put China on the expected growth track, “deeper” service sector reforms are needed.

“In a region which has really thrived through trade and investment in manufacturing… the next big key to growth will come from reforming the services sectors to harness the digital revolution,” he added.

Compared to second quarter of 2022, goods exports are down more than 20 per cent in Indonesia and Malaysia, and more than 10 per cent in China, said the FT report.

Rising household, corporate and government debt has further dented growth prospects, it added.

Another major reason is the trade tensions between China and the US. For years, Beijing was benefited by the tariffs it imposed on Washington that drove demand for imports towards other countries in the region, especially Vietnam.

But the introduction of the IRA and new chip rules in 2022 turned the tide in the favour of the US. They have hit south-east Asian countries as their exports of affected products to the US have fallen.

Chinese leader Xi Jinping has called for patience in a speech released as the ruling Communist Party tries to reverse a deepening economic slump and said Western countries are “increasingly in trouble” because of their materialism and “spiritual poverty.” File
| Photo Credit: AP

China’s economy, the world’s second-largest, is now in deep distress and its successful model of growth for 40 years stands “broken”, a prominent American financial publication has said, noting that signs of trouble extend beyond China’s dismal economic data to distant provinces.

TheWall Street Journal in a major Sunday story wrote that economists now believe China is entering an era of much slower growth, made worse by unfavourable demographics and a widening divide with the U.S. and its allies, which is jeopardising foreign investment and trade.

Also Read | China’s Xi calls for patience as Communist Party tries to reverse economic slump

Rather than just a period of economic weakness, this could be the dimming of a long era, it commented.

“Now the (economic) model is broken,” the financial daily said.

“We’re witnessing a gearshift in what has been the most dramatic trajectory in economic history,” Adam Tooze, a Columbia University history professor who specialises in economic crises, was quoted as saying by The Wall Street Journal.

According to the report, the total debt, including that held by various levels of government and state-owned companies, climbed to nearly 300% of China’s GDP as of 2022, surpassing U.S. levels and up from less than 200% in 2012, according to Bank for International Settlements data.

In Beijing’s corridors of power, senior officials have recognised that the growth model of past decades has reached its limits, the daily wrote.

In a blunt speech to a new generation of party leaders last year, Chinese President Xi Jinping took aim at officials for relying on borrowing for construction to expand economic activities, it added.

“Some people believe that development means investing in projects and scaling up investments,” Mr. Xi said, warning: “You can’t walk the old path with new shoes.” Mr. Xi and his team so far have done little to shift away from the country’s old growth model, the financial daily wrote.

China’s gross domestic product (GDP) grew 5.5% year-on-year in the first half (H1) of 2023, the country’s National Bureau of Statistics (NBS) said in June.

China’s GDP reached 59.3 trillion yuan (about 8.3 trillion U.S. dollars) in the first half, according to the NBS data. In the second quarter, the country’s GDP expanded 6.3% year on year, China’s official media quoted the NBS as saying.

Meanwhile, China on Monday also trimmed for the second time this year its one-year loan prime rate (LPR) by 10 basis points from 3.55% to 3.45% and did not change the five-year rate, which stands at 4.20%, to revive economic growth in the world’s second-largest economy after that of the United States.