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How likely is Beijing to walk the talk on boosting consumption?

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Chinese officials tend to report only good news and bury bad news for propaganda purposes and career advancement. That is why it came as a genuine surprise when, on July 22, Zhang Enhui, the party chief of Changchun, an industrial powerhouse known for its automobile sector and technological research, publicly broke with that tradition. He warned of “unprecedented difficulties and challenges” facing the city’s economy.

The remark was apparently swiftly scrubbed from the city government’s website, but the fleeting moment of candour was telling. It comes amid a nationwide debate on whether China’s second‑quarter gross domestic product growth (GDP) slowdown is a temporary dip or the beginning of a more persistent trend. The discussion has also reignited long-standing calls for Beijing to do more to rebalance the economy by stimulating domestic consumption and reviving the troubled real estate sector.
Complicating matters further is the looming start of China’s once‑every‑five‑years leadership reshuffle, which typically induces caution among officials at all levels. This political cycle tends to dampen risk‑taking and policy experimentation – factors that inevitably shape economic decision‑making.

Against this backdrop, Changchun party chief Zhang Enhui’s warning stands out. He urged “all‑out efforts” to confront “unexpected difficulties and challenges”.

The sources of those challenges are not hard to identify. China’s GDP grew just 4.3 per cent in the second quarter, down from 5 per cent in the first quarter, bringing first-half growth to 4.7 per cent. That puts the economy inside the official full-year target range of 4.5-5 per cent, but only just.

The slowdown was driven by falling private sector and fixed‑asset investment – long‑time pillars of China’s growth model. Fixed‑asset investment fell 5.7 per cent year on year, while property investment plunged 18 per cent in the first half. Retail sales grew only 0.2 per cent in the second quarter, compared with 2.4 per cent in the first.

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