China's slowdown — how it's being felt across the country
The world's second-largest economy was already slowing before the US-China trade conflict erupted. DW explores how different sectors of the Chinese economy are affected, and how tariffs could exacerbate the slump.
China's auto slump persists
The world's largest automotive market last year saw its first annual sales drop in more than two decades. A 5.8% fall was recorded by the China Passenger Car Association (CPCA). The rout has continued into 2019, with sales dropping 21% in the first four months compared to last year. Beijing is due to introduce stimulus measures, including incentives for first-time and rural car buyers.
Trade war hits Chinese exports
China's exports to the world sank 2.7% year-on-year in April. Exports to the US, meanwhile, dropped 13.2% amid a worsening trade conflict with Washington. Over the first four months of year, China's exports rose just 0.2% over the year. Manufacturing is expected to take a further hit as Hong Kong and Taiwan firms pull some of their production out of China to avoid US tariffs.
P2P loan industry dries up
A major upheaval is underway in China's peer-to-peer (P2P) finance sector after numerous cases of fraud and negligence. Thousands of platforms have gone bust or just disappeared, leaving investors nursing heavy losses. A government crackdown on lenders means millions of Chinese consumers now have no alternative credit line.
Consumers feel the pinch
Chinese consumers are cutting back on everyday spending. Clothing sales fell for the first time since 2009, while overall retail sales in April rose at their slowest pace in 15 years. With a huge stock market rout eating up retail investors' profits, the easy money that many middle- to low-income consumers have used to spend on designer and branded goods dried up.
Has the property bubble burst?
There are conflicting reports about China's long-booming property market. Last year, investors of apartments started protesting outside developers' offices after the values of their flats plummeted between purchase and construction. Although some reports suggest prices are rising again, particularly in the four largest cities, authorities are keen to avoid the property market overheating.
Zombie firms faces closure
A massive stimulus program in 2009 saw cheap loans offered to thousands of state-run industrial enterprises, including steel, aluminum, cement and coal producers. The investments created huge overcapacity in several sectors, and many firms relied on subsidies to stay afloat. Chinese authorities have since set a 2020 deadline to shut these "zombie firms," leaving behind an even bigger rust belt.
China's hidden joblessness
Officially, unemployment remains low in China. However, most of the 280 million migrant workers from rural areas aren't counted in official statistics. Gavekal Dragonomics recently showed large state-funded industrial firms cut about 2.8 million jobs in 2018. Although the private sector has seen strong employment growth in recent years, surveys by job agencies suggest hiring is falling.
Lies, damn lies and Chinese statistics
The accuracy of official Chinese goverment statistics has been questioned for years. According to the Brookings Institute, China's gross domestic product (GDP) is some 12% smaller than officially claimed. Researchers believe growth between 2008 and 2016 was on average 1.7% lower. If extrapolated to 2018, China's official 6.6% GDP figure would be more like than 5.8%.