Among its housing market downturn, and its post-COVID recovery grinding to a halt, China might be heading for a lost decade.
The housing downturn is hurting the balance sheets of Chinese companies, and the budgets of Chinese consumers, as they are stuck paying overpriced mortgages-they can't refinance easily. As the finances of firms and people get worse, the government decreases spending, making the situation even worse.
Monetary policy has been the only tool that China has used to keep the boom going so far, but it's facing a liquidity trap now, so rate cuts aren't an option to keep the economy out of a recession. The Chinese government has more room to borrow, so spending seems like the only reasonable option if China wants to avoid losing the 2020s.
Also, the political structure might be unfit for further growth, as the government interferes a lot with business, discouraging entrepreneurs and international companies. Institutional change is supported by some Chinese officials, but that also seems like a long shot.
Source: The Economist
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