New Delhi: China’s restrained approach to uplift its slowing economy “reflects concerns over local government debt burdens and the decreasing effectiveness of large-scale stimulus measures,” a report has said.
Hence, the report from Geopolitical Futures said expectations for China’s medium-term growth outlook have become more cautious, and with a rapid rebound seeming increasingly unlikely.
China’s economy will remain difficult to keep in balance due to pressures from weak domestic demand, a prolonged property downturn and geopolitical risks.
The report cited data that consumer sentiment and private-sector investment remain subdued even amidst and targeted support for strategic industries.
“Persistent deflationary pressures and high youth unemployment also signal that households and businesses are still cautious about spending and expansion,” the report said.
Even as China’s export sector remains resilient, offsetting part of domestic consumption weakness and downturn in property markets, escalating tensions in the Middle East could complicate China’s recovery as trade uncertainty and input costs rise.
Meanwhile, Beijing appears reluctant to launch another large-scale stimulus campaign similar to earlier versions during slowdowns, and authorities prefer incremental policy support, the report noted.
The Chinese administration also considers “selective infrastructure spending and targeted credit measures aimed at stabilising growth without significantly increasing debt risks.”
China’s official headline growth figures are fake and the country’s economy is headed for a major danger from its mounting bad debt and a rapidly ageing population, another recent report said.
It cited US think tank Rhodium Group estimates that true growth of the Chinese economy is closer to 2.5–3 per cent rather than the Chinese government’s real GDP growth figures for 2025 at 5 per cent.
“There are two major obstacles standing in the way of China’s economic future: massive amounts of bad debt born from a bursting bubble, and an inverted population pyramid from low birthrates and an aging population,” the report said.