striver44
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Consumption in China is only picking up slowly, not least because of highly indebted private households. Beijing still has some stimulus leeway, but Western economies are unlikely to benefit, says Frank Sieren.
It was certainly unusual that the central bank released the results of a poll that had been done last October. It showed that the Chinese had high levels of private debt even before the coronavirus crisis, meaning the bank has less leeway than previously thought.
Around half of the 30,000 Chinese households polled are in debt, with an average level of debt of $72,000 (€65,000), two thirds of which are down to mortgages. It means that 60% of private household assets are invested in property; a mere one-fifth are cash investments.
The main political implication of this poll is that by publishing it now the central bank may well have intended to hint that the government's measures so far may not suffice to boost the economy after coronavirus.
01:35 mins.
PEOPLE AND POLITICS | 17.04.2020
[paste:font size="5"]How will the coronavirus affect the world economy?
Boosting consumer spending should take priority as the service sector has long been the engine driving China's growth, accounting for around 60% of overall output. In January and February, retail sales plummeted by 20%, in March the drop still stood at around 16%.
01:28 mins.
DW NEWS | 02.05.2020
[paste:font size="5"]After coronavirus, don't write off China as world's factory
A long weekend is being discussed in several provinces to boost domestic tourism, where revenues are expected to drop by 69%.
However, there are unlikely to be any major infrastructure projects. "Too many aggressive stimuli may lead to inflation and a rise in debt quotas," a central bank spokesperson said. The market for the building of blocks of flats, airports and high-speed trains is more saturated than 10 years ago anyway.
It looks as though, this time, China will refrain from boosting the global economy by taking on higher levels of debt. Beijing is trying to achieve the biggest effect by doing as little as is absolutely necessary — at least for now.
Frank Sieren has lived and worked in Beijing for more than 25 years.
Consumption in China is only picking up slowly, not least because of highly indebted private households. Beijing still has some stimulus leeway, but Western economies are unlikely to benefit, says Frank Sieren.
It was certainly unusual that the central bank released the results of a poll that had been done last October. It showed that the Chinese had high levels of private debt even before the coronavirus crisis, meaning the bank has less leeway than previously thought.
Around half of the 30,000 Chinese households polled are in debt, with an average level of debt of $72,000 (€65,000), two thirds of which are down to mortgages. It means that 60% of private household assets are invested in property; a mere one-fifth are cash investments.
The main political implication of this poll is that by publishing it now the central bank may well have intended to hint that the government's measures so far may not suffice to boost the economy after coronavirus.
01:35 mins.
PEOPLE AND POLITICS | 17.04.2020
[paste:font size="5"]How will the coronavirus affect the world economy?
Boosting consumer spending should take priority as the service sector has long been the engine driving China's growth, accounting for around 60% of overall output. In January and February, retail sales plummeted by 20%, in March the drop still stood at around 16%.
01:28 mins.
DW NEWS | 02.05.2020
[paste:font size="5"]After coronavirus, don't write off China as world's factory
A long weekend is being discussed in several provinces to boost domestic tourism, where revenues are expected to drop by 69%.
However, there are unlikely to be any major infrastructure projects. "Too many aggressive stimuli may lead to inflation and a rise in debt quotas," a central bank spokesperson said. The market for the building of blocks of flats, airports and high-speed trains is more saturated than 10 years ago anyway.
It looks as though, this time, China will refrain from boosting the global economy by taking on higher levels of debt. Beijing is trying to achieve the biggest effect by doing as little as is absolutely necessary — at least for now.
Frank Sieren has lived and worked in Beijing for more than 25 years.
