China plays a big part in global trade, and as the country’s economy slows, the effects are felt worldwide. To help you understand what is going on and what we expect to happen in the future, our highly-experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You’ll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

Something’s amiss with China’s economy. The end of COVID was supposed to boost it, as Beijing ended its draconian lockdown measures. After a brief spurt, Chinese growth is falling. And when China’s economy slows, the whole world feels it, given China’s huge role in world commerce.

Note the red flags popping up in China: Its factory sector is contracting as demand for Chinese goods cools around the world. Consumers who are contending with inflation have less space in their budgets for nonessential items these days. Services and construction activity are down. Ditto, retail sales and business investment.

Most worrisome of all: the housing market, which peaked in May 2021. Since then, home sales are down by half. Price gains are weak. Many cities are full of empty apartments, a legacy of overbuilding. Housing was long a driver of China’s growth. But not now, and not anytime soon. Demand hasn’t kept up with the furious pace of construction. China’s consumers have plenty of money. However, they are saving, not spending. Consumer sentiment is below pre-COVID levels. Beijing has exhausted the potential of goosing the economy by channeling credit into the property market. Lenders are already grappling with too much bad debt.

Source: Kiplinger