SHANGHAI ¨C China¡¯s aggregate demand has weakened significantly over the past three years.
In addition to the enduring effects of China¡¯s anti-COVID-19 policy, the country has also been weighed down by the decrease in global demand. Exports fell by 14.5% year on year in July, a stark contrast from the robust 17.2% export growth recorded in July 2022. Given these downturn pressures, the government¡¯s decision not to announce a massive stimulus package, as many had anticipated, has left foreign and Chinese observers deeply perplexed.
While China¡¯s leaders are certainly aware of the ongoing economic slowdown, they may be estimating that the risk of a bailout is worse than the risk of inaction. Or perhaps they have more confidence in the domestic economy¡¯s resilience against a global recession and believe that the economy will recover quickly on its own.
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