While China is targeting a 5% growth rate for the year, this is a far cry from the pace of growth that has enabled the country to become a major world economic power. Youth unemployment stands at 17%.
Demand for bank loans has fallen sharply for the first time in twenty years. The unemployment rate among young people, one of the most significant indicators of the health of an economy, has soared, reaching 17% last month, according to official data based on the employment situation in major cities. These figures conceal an even more worrying reality in rural areas, where unemployment is growing at an alarming rate. It should be noted that the millions of migrant workers are not included in the country's unemployment rate.
The causes are as much internal as external. Among the factors specific to China, the massive crisis in the property sector and the contraction in consumption by the middle classes - who are much more cautious about buying goods, particularly luxury goods - are predominant.
Growth in industrial output stabilised in July 2024 at +5.1%, the weakest since March. Admittedly, relations with the country's two main export markets - the European Union and the United States - have rarely been so complicated. Relations with the European Union have deteriorated since the EU decided to reduce its trade dependence on China, particularly in the technology sector. China has reacted by launching anti-dumping operations on several European products, including French brandies such as cognac.
According to the Chinese Ministry of Commerce, this initiative follows a complaint lodged in November by the Chinese Alcohol Association. Questions are being raised about a possible government strategy, more or less overt, of boycotting products from Europe, thus generating a tug-of-war between the two economies. The investigation should be concluded by 5 January 2025.
These tensions also affect another key economic sector, the automotive industry. In September 2023, European Commission President Ursula von der Leyen, concerned about competition from Chinese electric vehicles on the EU market, announced the opening of an investigation into Chinese subsidies for electric cars. The same is true in the United States, where President Joe Biden, before abandoning the presidential campaign in favour of Kamala Harris, wished to position himself as a defender of workers by describing Chinese competition as ‘unfair’.
The geopolitical tensions surrounding Taiwan have further tarnished relations between the two economic powers.
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