China’s Economy Is ‘Slowing Quite Considerably’: Australian Treasurer

A Chinese vendor sells sneakers and shoes in the street in front of a sign showing Chinese President Xi Jinping with "China Dream" written on it, on April 9, 2017 in Shijiazhuang, Hebei province, China. Photo by Kevin Frayer/Getty Images

Australian Treasurer Jim Chalmers has expressed concerns about the Chinese economy, which he said is taking a downturn, and noted that this would have an impact on the Australian economy.

Mr. Chalmers noted that the situation China is facing now is “a very different combination of challenges compared with most of the rest of the world.”

He added that the world’s second-larges economy is “slowing quite considerably, they’ve actually got deflation, they’ve got a weak retail sector, there are particular concerns about the property sector, there’s some uncertainty around the way that their debt is set up, particularly their local government debt and their exports have been a bit weaker.”

“All of those things together paint a pretty concerning picture about China,” he told ABC’s RN Breakfast on Aug. 25.

While the government is predicting that the Australian economy will continue to grow, the “two biggest challenges to that outlook” are developments in China and the rate rises that are in the system.

Treasurer Jim Chalmers during the Budget lockup at Parliament House in Canberra, Australia, on May 9, 2023. Martin Ollman/Getty Images

“Obviously, we are exposed to developments in the Chinese economy, we’re not quite hostage to developments in the Chinese economy, but we are very exposed to them,” Mr. Chalmers noted.

“When it comes to our budget, when it comes to our economy, prospects in China matter a great deal.”

Worsening Prospect for China’s Economy

The comment comes as China’s exports witnessed a rapid decline for three months in a row, with the biggest drop of 14.5 percent in July, according to Chinese customs statistics.

In June 2023, China’s exports to Australia fell by US$640 million (A$998 million) or 9.51 percent, while imports increased by US$775 million or 6.21 percent, according to the Observation of Economic Complexity report.

Overall, China exported $6.09 billion and imported $13.2 billion from Australia, resulting in a negative trade balance of US$7.15 billion (A$11.15 billion).

This decline in exports has dealt a fresh blow to the Chinese economy, which is grappling with the consequences of the extreme three-year zero-COVID lockdowns. Local government is also facing high debt risks after rolling out massive spending on infrastructure projects to reverse the economic downturn.

At the same time, Beijing is attempting to reorient China’s economy toward domestic consumers and moving away from the U.S. dollar. The government is also increasing its economic countermeasures while continuing to impose strict regulatory control on foreign investment. Consumer confidence has been falling despite the government’s promise to rebuild the battered private sector.

Several experts have predicted that China is entering a prolonged period of stagnation, such as Christopher Balding, an expert on the Chinese economy at the Henry Jackson Society, a UK-based think tank.

Mr. Balding’s view said he expected China’s economy to be “very, very sluggish” and “turn into a long grinding mess as long as Beijing can draw it out.”

“People need to learn that the days of Chinese rapid growth—debt-fueled as it was—are basically over,” he told The Epoch Times. “And now they’re just trying to keep it from collapsing.”

Edward Yardeni, president of Yardeni Research, a global investment consultancy in New York, is more specific in his predictions. He said China’s economy would go into an “economic stagnation” that “could very well be for the next 10 to 20 years.”

“I think maybe whatever [the CCP] said that they think the economy can grow at, I would cut that in half,” he told The Epoch Times. “So we are looking at more like zero to two percent growth for the next few years.”

Terri Wu contributed to this report.