Crisis & fears - What are the main obstacles to Chinese growth?

economictimes.indiatimes.com:

property sector in crisis and deflation fears.

Here AFP looks at the main challenges facing the world's second-largest economy:

Fragile consumption

A high youth unemployment rate — 14.2 percent in May — and economic uncertainties are weakening consumption, one of the driving forces behind the Chinese economy.

China plunged into deflation for four months last October, with the sharpest contraction in consumer prices for 14 years in January.

They have since returned to positive territory but are rising only slightly, with June's increase just 0.2 percent, according to data released on Wednesday.

Stagnant or falling prices are bad for the economy's health, forcing firms to cut back to clear their stocks or reduce production in the absence of demand, which weighs on their profitability and willingness to hire.

Real estate in crisis

The property sector, which enjoyed two decades of meteoric growth as the population's standard of living rose, long accounted for more than a quarter of China's GDP.

But it has been under pressure since the government tightened credit conditions for property groups in 2020 in order to reduce their debt. Many such firms are now on the verge of bankruptcy.

That disincentivises Chinese people to invest in property, especially as real estate in China is often paid for before it is even built.

The fall in prices per square metre is also a blow to the wallets of homeowners, who have long seen property as a safe investment.

Local authorities in debt

The finances of some local