{"id":3792,"date":"2026-08-26T08:26:49","date_gmt":"2026-08-26T07:26:49","guid":{"rendered":"https:\/\/blogg.lnu.se\/china-research\/?p=3792"},"modified":"2026-08-26T08:26:56","modified_gmt":"2026-08-26T07:26:56","slug":"increasing-concerns-about-china","status":"publish","type":"post","link":"https:\/\/blogg.lnu.se\/china-research\/?p=3792","title":{"rendered":"Increasing concerns about China"},"content":{"rendered":"\n<p>Western view on China remains divided. Many analysts linked to macroeconomics and to financial stability remain worried or skeptical about the state of the Chinese economy. Corporate leaders in many industrial countries outside China feel on the other hand mostly scared about Chinese progress in certain high-tech segments and discuss scarcely the macroeconomic and financial problems of the country.<\/p>\n\n\n\n<p><strong>The absence of good economic news during summer<\/strong><\/p>\n\n\n\n<p>Without elaborating further all shortcomings of Chinese statistical quality, not even official Chinese statistics showed encouraging macroeconomic signals. Let&#8217;s give some disappointing examples that came in more lately:<\/p>\n\n\n\n<p>&#8211; <strong>GDP<\/strong> rose in Q2 by only 4.3 percent yoy, below the official objective of 4.5-5 percent for this year and below market expectations. One cannot rule out that this number in reality may have been even weaker. It may be added that 4.3 percent was the lowest annual GDP increase since Q4 in 2022.<\/p>\n\n\n\n<p>&#8211; <strong>Retail sales <\/strong>increased in July by just 0.6 percent yoy, down from 1 percent in June and below market expectations as well. Very weak car sales (-17 percent) contributed strongly to this disappointing number. Building materials, furniture and petroleum products fell also considerably in the same month.<\/p>\n\n\n\n<p>&#8211; <strong>Fixed asset investment <\/strong>decreased by 6.7 percent yoy during the January\u2013July period, worsening further compared to accumulated 5.7 percent in the first half of 2026. This number confirms the sluggish activity trend in the Chinese economy, particularly in the property sector.<\/p>\n\n\n\n<p>&#8211; <strong>Foreign Direct Investment <\/strong>fell in value terms to 6,2 percent in July (June -5 percent) after having been in negative territory since June 2023, reflecting (somewhat?) declining foreign interest in the Chinese market and increasing uncertainty about Chinese growth prospects.<\/p>\n\n\n\n<p>&#8211; The <strong>RatingDog China PMI <\/strong>\u2013 previously known as the Caixin PMI and put together by S&amp;P \u2013 weakened for manufacturing to 50,9 in July and to 50,4 for services in the same month. Thus, PMI for manufacturing has been moving down since April this year. PMI for services reached in July the lowest level since September 2024. &nbsp;<\/p>\n\n\n\n<p>The only important positive statistical exception could be noted for (gross) <strong>exports<\/strong> which in July expanded strongly yoy in USD terms by 23,9 percent, to a high extent due to high global demand for high-tech components; the AI boom and the demand for electric vehicles continued to favor Chinese exports substantially. Anticipated shipments to the U.S. for tackling potentially new American tariffs could have been another explanation for the surging Chinese exports. China\u2019s unsatisfactory domestic growth performance may have meant some extra political push to Chinese export efforts, too.<\/p>\n\n\n\n<p>However, <strong>imports<\/strong> grew by as much as 27.5 percent last month but still leading to a trade surplus of 112 billion USD in July. This is 15 billion USD more than one year earlier \u2013 a development that may induce intensified trade frictions and also tougher trade negotiations by the U.S. and the EU with China this coming fall.<\/p>\n\n\n\n<p><strong>The unknown dimensions of fiscal and financial imbalances<\/strong><\/p>\n\n\n\n<p>It cannot be questioned that weakening or declining economic growth has a negative impact on China\u2019s fiscal and financial stability. Certain concerns about this issue have been expressed in Western media more recently but without illuminating \u00a0details. These shortcomings can mainly be related to insufficient Chinese transparency both when it comes to the rapidly increasing central\/local government debt (<a href=\"https:\/\/tradingeconomics.com\/china\/government-debt-to-gdp\">https:\/\/tradingeconomics.com\/china\/government-debt-to-gdp<\/a>) \u00a0and the real state of all the insecure or bad loans of the financial system. More exact dimensions of these two \u2013 partly interlinked &#8211; issues remain therefore unknown but should cause worries, at least in the medium or the longer run.<\/p>\n\n\n\n<p>A conundrum are also the potential volumes of future politically based growth support. Fiscal constraints are certainly considered by the political leadership -but also the urgent need of certain growth-supporting measures. I would guess that China\u2019s political leaders prefer to go for quite cautious fiscal stimuli instead of really expansionary budgetary action. But who knows?<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><strong><em>Hubert Fromlet<\/em><\/strong> <br>Affiliate Professor at the School of Business and Economics, Linnaeus University<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Western view on China remains divided. Many analysts linked to macroeconomics and to financial stability remain worried or skeptical about the state of the Chinese economy. Corporate leaders in many industrial countries outside China feel on the other hand mostly scared about Chinese progress in certain high-tech segments and discuss scarcely the macroeconomic and financial [&hellip;]<\/p>\n","protected":false},"author":126,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13398],"tags":[],"class_list":["post-3792","post","type-post","status-publish","format-standard","hentry","category-china-2"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\r\n<title>Increasing concerns about China - China Research<\/title>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/blogg.lnu.se\/china-research\/?p=3792\" \/>\r\n<meta property=\"og:locale\" content=\"en_US\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"Increasing concerns about China - China Research\" \/>\r\n<meta property=\"og:description\" content=\"Western view on China remains divided. Many analysts linked to macroeconomics and to financial stability remain worried or skeptical about the state of the Chinese economy. Corporate leaders in many industrial countries outside China feel on the other hand mostly scared about Chinese progress in certain high-tech segments and discuss scarcely the macroeconomic and financial [&hellip;]\" \/>\r\n<meta property=\"og:url\" content=\"https:\/\/blogg.lnu.se\/china-research\/?p=3792\" \/>\r\n<meta property=\"og:site_name\" content=\"China Research\" \/>\r\n<meta property=\"article:published_time\" content=\"2026-08-26T07:26:49+00:00\" \/>\r\n<meta property=\"article:modified_time\" content=\"2026-08-26T07:26:56+00:00\" \/>\r\n<meta name=\"author\" content=\"Hubert Fromlet\" \/>\r\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\r\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Hubert Fromlet\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\r\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/blogg.lnu.se\/china-research\/?p=3792\",\"url\":\"https:\/\/blogg.lnu.se\/china-research\/?p=3792\",\"name\":\"Increasing concerns about China - China Research\",\"isPartOf\":{\"@id\":\"https:\/\/blogg.lnu.se\/china-research\/#website\"},\"datePublished\":\"2026-08-26T07:26:49+00:00\",\"dateModified\":\"2026-08-26T07:26:56+00:00\",\"author\":{\"@id\":\"https:\/\/blogg.lnu.se\/china-research\/#\/schema\/person\/3c3b67b85e96d1cc89d09dda3a189b38\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/blogg.lnu.se\/china-research\/?p=3792\"]}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/blogg.lnu.se\/china-research\/#website\",\"url\":\"https:\/\/blogg.lnu.se\/china-research\/\",\"name\":\"China Research\",\"description\":\"A discussion forum on emerging markets, mainly China  \u2013                                          from a macro, micro, institutional and corporate angle.\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/blogg.lnu.se\/china-research\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/blogg.lnu.se\/china-research\/#\/schema\/person\/3c3b67b85e96d1cc89d09dda3a189b38\",\"name\":\"Hubert Fromlet\",\"url\":\"https:\/\/blogg.lnu.se\/china-research\/?author=126\"}]}<\/script>\r\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Increasing concerns about China - China Research","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/blogg.lnu.se\/china-research\/?p=3792","og_locale":"en_US","og_type":"article","og_title":"Increasing concerns about China - China Research","og_description":"Western view on China remains divided. 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