Weak China and Europe Economies

China GDP was negative 2.6% in the April-June period on a quarter-over-quarter basis but was +0.4% expansion compared to the second quarter of 2021.

It was China’s worst quarterly performance since a 6.9% contraction in the first three months of 2020 as the country locked down the city of Wuhan, where the new coronavirus was first detected.

The latest result was below the median estimate of 1.1% growth in a survey of 35 economists polled by Nikkei, and sharply down from a 4.8% year-on-year expansion in the first quarter.

China has a 5.5% GDP target for 2022 but most economists are now expecting a 3-4% GDP for China in 2022.

European Commission cuts 2023 GDP projection for Europe to 1.4% from 2.3%. The estimate for European inflation is now seen averaging 7.6% this year, 4% in 2023.

The Bank of France puts France’s second-quarter GDP growth at about 0.25%.

The first quarter Europe GDP did not show the full impact of the war in Ukraine and high inflation and fuel prices.

The Euro is now trading at parity with the US dollar.

source: tradingeconomics.com

source: tradingeconomics.com

source: tradingeconomics.com

6 thoughts on “Weak China and Europe Economies”

  1. There’s too many people in China. In the widest view, population shrinkage is good. The only question is how to deal with the obvious problem: an aging population, and what to do with all those old and retired people. Unretire them? Robots?

  2. China growth even at three four percent as forecasted, is better than the US with as predicted at best, no growths.

  3. The large population that helped accelerate growth is now aging out, yet it is doing so without replacing its numbers, ergo lots more old people, and far fewer young people to support them. Also, for shameful reasons, 25 to 40 million young males will be unable to find female partners. These will typically be the poorer and less well-educated males, and this not a situation that will enhance social stability.

    There is an epic water crisis that will only be further exacerbated by climate change. In 20 years, 28,000 rivers have disappeared. Beijing suffers from frequent sand storms. With 4 times its population, and the same amount of land, China only has 20% as much arable land of the US. If ships full of food, and things with which to grow food, stop arriving constantly at Chinese ports, there will be hunger.

    They also have serious problems collecting taxes. They are unable to invest in agricultural and industrial reform on the scale and speed required, especially as they spend more on domestic surveillance and control than they do on a bloated and unnecessary military, both due to the government’s fear of unrest.

    Also, because of that fear of unrest, the government has proven quite willing and able to deliberately cripple its own economy in order to prevent any possible dilution of its power.

    There is more. China lacks an educated work force. For a country to escape the middle-income trap, about 60% of its people must complete secondary educations, yet China manages only half of that. Worse, 70% of children live in the countryside, with inadequate educational opportunities and with inadequate nutrition further reducing their ability to learn, permanently. They tend to grow into adult workers that are unable to compete in modern economies.

    The government’s intention to use technological innovation to overcome all of this is greatly increasing the inequality between the highly educated and the numerous poorer migrant workers that were already at a large disadvantage for learning new skills.
    Further, the censorship and restrictions of freedom imposed by the government, in an attempt to manage social instability, is not conducive to any kind of innovation.

    Finally, none of this even touches on the damage that may be done by their censoring of Winnie-the-Pooh.

  4. There is a bigger picture with China. the fast population shrinkage, which is not reported, together with a lack of free market, is taking toll on the economy on the long run. China is entering the same economic stagnation that Japan is in for more than three decades.

    • True. Like the Russian decision to invade Ukraine might be choice of now-or-never, the decision to invade Taiwan might be coming to a head. In five years, the population and economy, and therefore the communist party’s grip, will be much weaker.

      • The best time to invade Taiwan was during the revolution 73 years ago. It’s gotten harder every year since then.

        Everyone they rebelled against is dead. The Empire is gone.

        Now it can only be called a land grab.

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