Indications of Chinese economy slowing down due to new jolts

Beijing: – China, which was boasting as the only economy to progress even during the Coronavirus pandemic, has started receiving fresh jolts. For the last few months, the number of defaulter companies is on the rise, and as per indications, some of these companies could declare bankruptcy. At the same time, the profitability of the Chinese companies is declining, given the rising raw material prices in the world. At the same time, an article on the US website Forbes claimed that the days of Chinese economic marvel are overdue to the policies of President Xi Jinping.

The extent of the commotion caused by the Coronavirus pandemic has not reduced in the world. Many leading economies have taken a major hit because of the pandemic in the last year. Economies of the United States and European countries recorded a negative growth rate. At the same time, China informed that its economy grew by more than 2%. But the developments over the last few months prove that this Chinese picture is fake and fragile.

At the beginning of the year, the International Monetary Fund warned that the debt burden in the Chinese economy is increasing tremendously, and the credibility of the private sector also is declining. Still, the Chinese regime did not take steps to reduce the debt burden or limit the associated threats. One report showed that the proportion of repayment failures increased in the first four months of 2021. As per the information given by Bloomberg, the Chinese companies have defaulted on repayment of a whopping USD 18 billion in the first four months of this year. This is a 70% increase, as compared to the same period last year.

Industrial production in China declined by 4.1% in April. In March, growth in industrial production was 14.1%. This dropped to 9.8% in April. There has also been a drastic fall in sales in the retail sector. Retail sales pegged at 34% in March have declined to 17.7% in April. Significant decline has been noted in the profits of the companies, even from the industrial sector. In March, the profit percentage of these companies was 92%. In April, this reduced to 57%. The reason for the decline is said to be the increasing raw material rates. There has been an increase of about 50% in the prices of metals like steel and copper.

Meanwhile, the Forbes website from the United States claimed that the days of Chinese economic marvel are over, and the policies of President Xi Jinping are responsible for it. Analyst Michael Schuman said that President Xi Jinping is trying to tighten his grip on the economy, and these efforts reduce the speed of future growth.

Analyst Nicholas Lardy claimed that there has been an increase in lending to the government companies instead of the private sector ever since Xi Jinping took over as the Chinese President. Lardy also pointed out that as these companies attach more importance to the national policies, there has been a reduction in the efficiency of the economy and productivity of the workforce.

The article also points out that the action against entrepreneur Jack Ma also is a glaring example of the monopolistic attitude of the Chinese communist party. An action was taken against Jack Ma because of trivial criticism of the Chinese communist regime. Therefore, he was not traceable for an extended period after that. Jack Ma tries to thin out the mystery surrounding him by making appearances in some functions and programs, but it is visible that there are severe restrictions on his movements.