Why China's Economy is Sputtering

On today’s show, we are taking a look at one of the largest economies in the world and wondering why it seems to be sputtering.

We are of course, talking about China. Earlier this year the Chinese economy was in strict lockdown due to the COVID-19 pandemic. After weeks of protest, the Chinese government change course and opened up the economy, seemingly overnight. At the same time, the economy inn, Europe, Japan, And even the United States were showing signs of weakness. China reopening was heralded as the saviour to pull the global economy out of what seems like an impending recession, but that recovery failed to materialize.

We witnessed other economies around the world emerge from the lockdown to the pandemic and experience a massive surge in spending. We saw a recovery in demand for products and services that have been suppressed during the lockdown periods. We saw international travel resume. We saw a surge in demand For new homes.

We saw businesses throughout the west, respond to the supply, chain shortages of the pandemic, whereby they were placed just in time inventory management with just in case inventory management. Retailers did not want to leave business on the table by failing to carry ample supply or products that customers wanted to buy. After all, interest rates were low, and the additional cost of carrying that extra inventory was much cheaper than the loss of revenue associated with supply chain shortages.

Surely, China reopening would see a surge in demand for everything from finished products to raw materials.

But it did not happen. Why did China’s economy sputter when the rest of the world emerged from the pandemic with their economy on fire?

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Host: Victor Menasce

email: podcast@victorjm.com