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China’s GDP expansion is currently underperforming that of the rest of Asia, posing a challenge for the Chinese economy. The country faces various substantial obstacles that hinder its economic growth, including a property crisis and high youth unemployment rates. This has led to a prediction that China will experience a decrease in economic development compared to other Asian nations after decades of robust growth.
Data collected by HSBC as of November 2024 illustrates the anticipated expansion of per-capita GDP for specific Asian countries between 2023 and 2026. Over this period, India and Southeast Asian nations are expected to achieve an average per-capita GDP growth of 6.5%, outpacing China’s projected growth rate.
Factors that are expected to drive the growth of India and Southeast Asian economies include strong foreign and domestic private investment flows, a thriving technology sector, a rising middle class, and a youthful demographic. These favorable conditions are likely to contribute to the economic success of these nations in the coming years.
However, China is expected to lag behind with an average per-capita GDP growth rate of only 3.9% during the same period. To address these economic challenges, Chinese leaders have expressed their intention to implement more robust stimulus measures to boost consumer demand. They have also proposed plans for interest rate reductions and increased government expenditure to stimulate economic growth.
Robin Xing, chief China economist at Morgan Stanley, highlighted the difficulties that the Chinese Communist Party faces in revitalizing the economy. Xing described it as a “long, long battle” and emphasized that 2025 would be a year of significant efforts. He suggested that by 2026, China may identify the right policy mix, focusing on consumption-centric stimulus measures and reforms to the social safety net.
The underperformance of China’s economy compared to its Asian counterparts is a cause for concern, as it may have wider implications for the region and the global economy. China’s economic growth has been a key driver of overall Asian economic growth in recent years. If China continues to struggle with economic challenges, it could impact regional trade and investment flows, as well as global economic stability.
Therefore, it is crucial for Chinese policymakers to address the structural issues that are holding back economic growth and implement effective measures to stimulate the economy. By fostering a more consumer-driven economy and improving the social safety net, China can lay the foundation for sustainable and inclusive growth in the years to come.
In conclusion, while China’s GDP expansion is currently underperforming compared to the rest of Asia, there are opportunities for the country to overcome its economic challenges and achieve sustainable growth. By implementing the right policy measures and addressing structural issues, China can position itself for success in the future and make a positive contribution to the Asian and global economies.
