Why is China's economy struggling?

economictimes.indiatimes.com:

China is likely to report rapid economic expansion for the second quarter, although underlying figures will reveal a more challenging picture. The comparison with last year, when Shanghai was enduring a Covid-related lockdown, will make Monday’s gross domestic product data look a lot better than was actually the case. GDP likely grew 7.1% for the quarter on a year-over-year basis, up from 4.5% in the previous period, according to economists surveyed by Bloomberg.

Compared with the first quarter of 2023, though, it probably rose just 0.8%. Monthly data for industrial production, retail sales and fixed investment — all scheduled for Monday — are expected to show a marked slowdown in June. Retail sales growth, in particular, likely slid to 3.3% from 12.7% in May.

Economists are focusing on the latter figures to get a fuller picture of China’s recovery. The signs so far have been disappointing: manufacturing activity is contracting, deflation is looming, export demand is falling, and recent holiday spending was subdued. Speculation has grown that the People’s Bank of China will add more stimulus after a surprise interest-rate cut in June.

Officials signalled on Friday that more support may be on the cards, although it’s likely to be limited in scope and targeted toward specific sectors, like the property market and private businesses. All economists surveyed by Bloomberg predict the PBOC will keep the rate on its one-year policy loans unchanged at 2.65% on Monday, while some expect a small net injection of funds. Elsewhere, a pivotal UK inflation number will help signal the size of the next rate move, retail sales take center stage in the US, and central-bank decisions from Turkey to South Africa may deliver some drama.US