China is suffering a range of economic issues, with tumbling stocks the latest sign of worry. The situation has officials, analysts, and consumers pessimistic about the future. Meanwhile, countries reliant on China for trade and investment, including Taiwan, are wary of the ripple effects of the Chinese economic slowdown.
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NewsTranscript
00:00 Falling prices, plummeting trade figures, rising unemployment, a worsening real estate
00:06 crisis, and now big drops in local stock markets.
00:12 China's economy was expected to make a big recovery after it lifted harsh COVID restrictions
00:16 in 2022, but the recent numbers paint a bleak picture for officials, who are now hoping
00:22 to keep things from completely spiraling.
00:26 Even the country's citizens are feeling the squeeze, as layoffs and pay cuts hit workers
00:30 across multiple industries.
00:31 "It's hard to say.
00:34 The factory's performance is not very good.
00:39 The overall environment is not good.
00:43 It's harder than it was in the past."
00:46 "Our company has closed many chain stores.
00:50 We are in the financial sector, and our salary is a little affected."
00:56 "The insurance industry is in the financial sector, optimizing and reducing costs.
01:01 I think the core logic is the supply-demand relationship."
01:05 GDP did pick up last year, growing 5.2%, a rise from the 3% seen in 2022, but that hasn't
01:13 been enough to reverse declining sentiment among businesses and consumers.
01:18 The grim outlook has led foreign investors to pull out in droves from China's markets,
01:22 which were sent tumbling last month.
01:25 The SSE Composite Index, which tracks all stocks traded on the Shanghai Stock Exchange,
01:30 dropped to its lowest point in several years amid signs of panic selling.
01:35 Though it's made a weak recovery, analysts say the big issue is real estate, brought
01:39 back into focus by the recent downfall of developer Evergrande.
01:44 The property giant sent China's economy into a tailspin when it defaulted on its debts
01:48 in 2021.
01:50 And in late January, a Hong Kong court ordered Evergrande to liquidate, dealing a further
01:54 blow to confidence in China's real estate market.
01:57 "So this is the key thing that's affecting the stock market itself.
02:03 Because as we all know, the real estate market, the negative wealth effects may affect the
02:09 consumer behavior and expenditure.
02:12 So this is maybe one thing to drag down the economy in the longer term."
02:20 China's Securities Commission has said it will step in to stabilize markets, including
02:24 cracking down on things like market manipulation and insider trading.
02:28 But other issues with China's economy, like slumping imports and exports, could impact
02:34 Taiwan, which relies heavily on its trade with China.
02:37 A significant number of foreign investors in China are also Taiwanese.
02:42 They're exposing Taiwan's economy to the stutters happening across the strait.
02:47 Analysts say this could drag down economic growth in Taiwan.
02:50 "We're still talking about 35% of exports going to China and 50% of FDI are also in
02:57 China as well.
02:58 I think if we continue to see a deceleration of economic growth in China in, let's say,
03:03 the next decade from right now around 5% to 4%, I wouldn't be surprised that we will see
03:10 Taiwan GDP growth desaturate by basically around 0.4%."
03:17 Taiwan has also been trying to reduce its economic reliance on China, which claims sovereignty
03:22 over Taiwan, and frequently uses economic and political pressure to try to achieve its
03:26 goal of taking the country.
03:29 But the ripple effects of a continuing slowdown could reach even those countries, like Taiwan,
03:34 that have worked to de-risk from the world's second largest economy.
03:38 Joseph Wu and Jeremy Olivier for Taiwan Plus.
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