2024 could become a horrible year for China's economy

China is one of the biggest (if not the biggest) economy in the world. However, things are not looking great for the great Asian dragon, moneywise.

CNN Business comments that 2023 was meant to be a year of post-Covid financial recovery for Beijing. Instead, China's economy has been described by experts as “dragging”.

According to CNN, the country could be facing what economists describe as “the Middle Income Trap”. That is, emerging economies that manage to quickly get out of poverty, only to fall into stagnation.

Indeed, without the government pursuing major economic reforms, experts believe China's economy could get stuck in a limbo for years.

According to Reuters, the International Monetary Fund forecasted a 2023 a GDP growth of 5.4%, and the number is likely to go down to 4.6% in 2014 and decrease in the following years, as the economy slows down.

This is quite a contrast to the 2000s and the 2010s, when China's annual growth was around an average of 9%, and Beijing hosting the 2008 Olympic Games marked showcased a modern and globalized China.

The real estate crisis in China is getting deeper. Once the country’s biggest job creator, fears of defaulting seem to be running the housing sector to the ground and the whole of the economy of the Asian superpower with it.

Exports have also hit a rut. French newspaper Le Monde stated that goods exported by China fell 14.5% in July.

The New York Times reports that unemployment among the Chinese youth has gotten so bad that Beijing has stopped releasing public data. The last was recorded number was 21.3% in June 2023.

To top it all, China’s currency, the yuan, has reached its lowest level in 16 years.

CNN points out that this is quite different from the 2008 Financial Crisis, when China launched the biggest stimulus package in the world.

Also, quite a contrast from the early months of the Covid-19 pandemic, when it was the only major economy to dodge a recession.

In fact, China getting rid of its last Covid-related restrictions made many optimistic, seeing that it generated an economic push. However, now that has passed.

Le Monde calls this crisis as “unprecedented” and believe that, rather than a major meltdown like the 2008 Financial Crisis, it could be something akin to the Japanese crisis of the 1990s. A long period of stagnation.

As Le Monde highlights, this could be the biggest challenge that Xi Jinping to date.

Nonetheless, Bloomberg remarks that even if China's economy could be described as “fragile”, it's unlikely that this slowdown will represent a collapse anytime soon.