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Opinion | China must go radical to restore confidence in its economy
- Setting up a special bureau to look over business owners’ shoulders misses the mark
- Beijing needs to stop harassing private firms, rethink its anti-corruption drive and trim the bureaucracy – nothing short of a mind-set change
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China is experiencing a crisis of confidence in its economic strength and growth prospects. That seems to be the prevailing headline in foreign media talking about the world’s second-largest economy. Some analysts even believe that China is facing the worst economic crisis since the launch of reform and opening up in the late 1970s.
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There is plenty of evidence to support the argument. After nearly three years of strict pandemic lockdowns, expectations that China’s economy would roar back to life never materialised. Consumers are holding back on spending while businesses are reluctant to expand and instead cutting costs.
Property prices are falling while some of the country’s largest real estate companies have defaulted on debt payments. Unemployment is soaring, particularly among the youth, so much so that China suspended release of employment data for the 16- to 24-years-olds. Stocks in the Chinese mainland and Hong Kong have tumbled, and the yuan has weakened as investors continued to pull billions of US dollars out of stock markets.
All this doom and gloom has prompted some analysts to raise the previously unthinkable question of whether China is on an irreversible downward spiral and express worries about potential contagion in the global economy.
Under the circumstances, some are puzzled why China has been reluctant to launch a bazooka-style economic stimulus programme like it did in the wake of the global financial crisis in 2008, which succeeded in getting the economy roaring again.
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What is Beijing thinking? There is speculation that China’s top leaders still have confidence in the resilience of the economy. It is true that China’s economy is not struggling as badly as is being portrayed in foreign media reports and analyses, and there are tentative signs that it is starting to stabilise.
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