The Chinese economy is facing serious challenges, which jeopardize its long-term economic growth. The real estate crisis and high youth unemployment are among the main problems. With many Asian countries continuing to show steady economic growth, forecasts for China look less optimistic.
Projected GDP growth per capita
A recently released chart based on HSBC data for November 2024 shows the expected change in GDP per capita for selected Asian countries between 2023 and 2026. According to the data, China is among the laggards.
The countries of South and Southeast Asia, as well as India, lead in this ranking. The projected average GDP growth per capita will be an impressive 6.5% over the specified period. These economies, fueled by robust growth, are moving forward, supported by a youth population, an expanding middle class, active foreign and domestic investment, and a thriving technology sector.
Comparative analysis of growth rates
Here is the average forecast for GDP per capita growth in several countries:
- China: 3.9%
- Japan: 4.1%
- Vietnam: 4.7%
- Singapore: 5.3%
- Thailand: 5.4%
- Malaysia: 5.7%
- Indonesia: 6.7%
- Philippines: 8.7%
- India: 8.7%
Obviously, the forecast for China, which was only 3.9%, looks disappointing against the background of the high growth rates of its neighbors.
Retaliatory measures by the Chinese leadership
In response to these economic challenges, the country's top leadership has begun discussing measures to stimulate the economy. The purpose of these steps is to solve the problems that have arisen in demand from consumers. According to senior Chinese officials, there are plans to increase government spending and further lower interest rates.
Robin Xing, Morgan Stanley's chief China economist, stressed that the ruling Communist Party faces a "long struggle" to restore economic growth. He also noted that 2025 will be a "year of trials." According to him, perhaps by 2026 the government will find the best approach in the form of a combination of measures to support consumption and social security reform.
China is on the verge of major changes, and observing its economic development, we can witness the formation of new trends not only in the Asian region, but also in the global economy. The question of whether the Chinese authorities will be able to successfully cope with these challenges remains open.
