Why China’s Economic Health Matters

By: Anneken Tappe · November 30, 2023 · Reading Time: 2 minutes

Economic Headwinds

China is the second-biggest economy in the world, and its commercial health is undeniably tied to global economic growth. It’s not surprising then that Washington is keeping a close eye.

China’s economic challenges are varied, including a struggling property sector, rising government debt and unemployment, as well as an aging population. But all this could spell trouble abroad as well.

Housing Hurdle

Analysts point toward a subdued reopening following pandemic-era lockdowns in China. Meanwhile, its real estate sector woes have long arrived on American shores as well after property developer Evergrande filed for bankruptcy protection in the U.S. August.

Part of the China housing story is that consumers are reluctant to buy because they hope for lower prices, while developers are stuck with an oversupply of units.

Ripple Effect

If the second-largest economy in the world is struggling, you better believe there are repercussions. But they might not be all bad. For example, countries importing Chinese goods, such as the U.S., could see better prices, analysts posit. But a Chinese slowdown might also weigh on commodity markets, as reduced demand for fossil fuels would likely weigh on oil prices.

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