SCOTT SIMON, HOST:
The world's second-biggest economy is struggling. New economic data shows that China is on track for a year of growth that's among the slowest since 1990, the year after the crackdown on protesters in Tiananmen Square. NPR's China correspondent John Ruwitch joins us. John, thanks so much for being with us.
JOHN RUWITCH, BYLINE: Happy to be here.
SIMON: What do the latest numbers show?
RUWITCH: Well, they show that the gross domestic product growth between July and September was 4.6% year on year. That is a slight slowing from the second quarter, but it's a little better than expected. On the plus side, industrial output was up, and retail sales exceeded expectations. That's an important one because weak consumption has been a really huge part of the problem with this economy. And the government knows it, and they're worried about it. Part of what drove retail sales this last quarter were subsidies for trade-ins on appliances, like air conditioners, fridges, those things.
SIMON: What seems to be behind the slowdown?
RUWITCH: The big thing is real estate, as it's been for the past year or two. Activity has been depressed pretty consistently since the government adopted measures to pop the bubble a couple of years ago. So property investment in the recent quarter fell. In the year-to-date, it was down more than 10%. New home starts also fell in the double digits. Property prices continued to slide. The overall situation still feels quite grim in China. I was in Beijing recently and spoke with a tailor named Li Jianjun. His customer base has shrunk, he says, since before the pandemic. And he says his income has dropped 40%.
LI JIANJUN: (Speaking Chinese).
RUWITCH: He says before the pandemic, a lot of people came in to get new clothing. Now they're coming in for alterations if their size has changed or whatnot because their income has shrunk. And when they do give him orders for new suits or shirts, he says customers are really opting for Chinese-made cloth rather than more expensive imports.
SIMON: And, John, what's the government trying to do in response?
RUWITCH: Well, there have been bits and pieces over the past few months to try to prop up the economy. Starting late in September, they really ramped that up with a string of new measures. They've got a more aggressive monetary policy in place now. They've lowered interest rates, for example. They've tried to prop up the stock market. They're taking steps to reflate the real estate market to a certain extent and to capitalize developers. They're also poised to issue a bunch of new central government debt to recapitalize state-owned banks to help local governments out of their major debt problems. Alicia Garcia-Herrero is chief economist with the French investment bank Natixis in Hong Kong.
ALICIA GARCIA-HERRERO: Is that a stimulus? Not really, but they need to do it first. It's like a precondition because if not, it will be throwing good money on bad money, because there's too much bad debt in the system. There's systemic risk. There's deflation.
SIMON: So, John, do experts think it's going to work?
RUWITCH: Well, I think what this economist just now is saying is that these measures are focused on sort of addressing acute crises going on in the economy right now. Like, take local government debt, for instance - there are reports that some localities aren't able to pay government employees their wages. These are people in the middle class, right? How can China ramp up consumption if these people aren't even getting paychecks? Some economists say that the - you know, the measures they're taking are good. They're a good first step. They're not enough really to boost domestic demand and consumption or to change the structure of the economy.
The government is aiming for around 5% growth this year. After factoring in the latest data, though, some now think it'll fall short of that. What's interesting is the contrast. You know, China's economy is continuing to weaken, and it's happening at a time when the country is really amped up its sort of muscularity on the global stage. It just had military drills around Taiwan, for instance.
SIMON: NPR's John Ruwitch. Thanks so much for being with us.
RUWITCH: You're welcome.
(SOUNDBITE OF SLUSHII'S "SAPIENT DREAM") Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
