China's economy, once deemed the driving force behind Asia's rapid growth, is headed for a downturn. Analysts are anticipating the slowest quarterly growth of the year, as indicated by an AFP survey prior to data release on Friday.
The significant reduction in expansion is likely the consequence of the chronic debt crisis that has plagued the country's property sector. Despite relentless efforts, authorities have yet to successfully reignite China's consumption. As a result, the pressure on the overall performance of the Chinese economy has grown exponentially.
A combination of factors have hindered the Chinese government's struggles to regain a brisk growth pace. These include the decline of its most important driver – real estate – and an increase in expenses for families, leaving less room for consumer spending.
Efforts to avoid financial irregularities have led banking and funding institutions to implement stricter debt regulations. Consequently, they've been hesitant in lending to major local developers, adding fuel to the spiraling debt emergency.
As this threatens to destabilize China's financial system, Beijing needs to balance boosting economic performance, stimulate household consumption, and alleviate the plight faced by beleaguered developers. After all, preventing an unfathomable economic downturn would arguably define China's ability to sustain its long-standing position in the global economic arena.