China's economic woes give its markets a week to forget, and its public little cause for optimism
This week's market slump comes at a time when China is struggling to recover from the pandemic and is beset with inflation and a sluggish property market.
BEIJING — A wave of optimism swept Chinese markets recently when Beijing announced a stimulus package many hoped would pave the way for a wave of investment to help fuel a recovery for the world’s second-largest economy.
Traders rushed to buy Chinese stocks, sending the top Shanghai and Hong Kong indexes soaring.
But the measures that Beijing’s economic planning agency announced this week proved to be an anticlimax — the trillions of yuan that observers were hoping would be revealed never materialized. Investors were disappointed to say the least: Hong Kong’s Hang Seng index suffered its worst daily drop in 16 years and Shanghai’s CSI 300 closed down for the first time in 11 days.
That slump comes against a gloomy economic backdrop for China, which is still struggling to recover from the Covid-19 pandemic and is beset with inflation and a sluggish property market. This year, youth unemployment reached a record high of 18.8%. Beijing might even miss its annual growth target of 5% — a figure it often surpassed prior to the pandemic.
Beijing said at a news conference Tuesday that it was “confident” it would meet its economic targets, and that message has been repeated by Chinese President Xi Jinping, who has stated his goal of turning around his flagging economy. Late last month, he described China as being “well prepared” to overcome the “potential dangers” to his country’s prosperity.
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