China’s Problem Is Lack of Demand, Which Is Not Easy to Boost

Cargo containers and gantry cranes at Yantian port in Shenzhen, China's southern Guangdong Province on July 13, 2022. Jade Gao/AFP via Getty Images

Commentary

Now in 2023, China is again the focus of the economic outlook. Most forecasts, whether from the public or private sector, believe China will continue to be the key growth engine worldwide. Admittedly, China is producing a very high growth number compared to many other large economies. However, the 4-5 percent real GDP (year-over-year) growth rate corresponds to a composite Purchase Management Index (PMI) of 50, the boom-bust split. The Chinese government never explains why such markup exists, and not many in the market have ever questioned such an anomaly in forecasting.