Chinese engine is sputtering: What China's stalling economy means for the world
China has been synonymous with relentless development and upward mobility. As its 1.4 billion people gained an appetite for the wares of the world — Hollywood movies, South Korean electronics, iron ore mined in Australia — the global economy was propelled by a seemingly inexhaustible engine. Now that engine is sputtering, posing alarming risks for Chinese households and economies around the planet.
Long the centerpiece of a profit-enhancing version of globalization, China has devolved into the ultimate wild card in a moment of extraordinary uncertainty for the world's economy. The risks have been amplified in recent weeks by a slew of developments. First came word that China's economy had slowed substantially in the spring, extinguishing hopes of a robust expansion following the lifting of extreme COVID restrictions.
This week brought data showing that China's exports have declined for three months in a row, while imports have dropped for five consecutive months — another indicator of flagging prospects. Then came news that prices have fallen on a range of goods, from food to apartments, raising the specter that China could be on the brink of so-called deflation, or sustained drops in prices, a harbinger of anemic commercial activity. And in a sign of deepening distress in China's housing market — the intersection of finance, construction and household wealth — a major real estate developer called Country Garden missed payments on its bonds and estimated it lost up to $7.6 billion in the first half of the year.
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