After many data indicators revealed that the world's second-largest economy is experiencing difficulties on numerous fronts, there have been questions raised regarding China's embryonic economic recovery. Even though youth unemployment remained an issue, industrial production data fell far short of expectations. Mint discusses the decline in confidence in China's economic recovery.

After the nation's tight covid restrictions were lifted earlier this year, the Chinese economy began to show signs of hope as the second-largest economy in the world registered 4.5% GDP growth during the first three months of 2023. China's revival stood out amid pessimistic economic predictions in many wealthy nations.

Depressed housing market and rising youth unemployment pose significant problems

But as significant data signs indicate that China's recovery is stalling, optimism about the country has been shaken. In April, industrial production increased 5.6% year over year, significantly undershooting expectations. In the economic news today, May's manufacturing activity decreased for the second consecutive month, according to statistics issued on Wednesday. The level of industrial profit has likewise been low.

These problems have been made worse by more significant problems like a depressed housing market and increasing youth unemployment, which reached 20% in April. It appears that China's youth are bearing the brunt of the nation's economic downturn. Young job searchers have been harmed by the government's focus on industries including finance, real estate, technology, and startups that cater to consumers.

The real estate industry, which has been a major driver of the nation's economic growth, is still confused and puzzled after a tumultuous year that saw irate homeowners refuse to make mortgage payments. This, along with a run-in with the nation's regulators, has eroded trust in the industry. Home sales decreased 63% from 2019 levels, according to the research firm Gavekal.

These concerning indications appear in response to policymakers' low 5% growth objective for 2023. In 2022, the GDP only expanded by 3%. However, it appears that consumer and private sector confidence has declined, which is not encouraging for the economy. The country's poor economic performance has caught the attention of the markets. The recent business news indicates that since mid-April, the value of stocks in Chinese corporations has fallen by $540 billion, also under strain is the yuan.