Ten challenges facing China’s economy
Alicia Garcia Herrero
In this analysis, Senior Fellow Alicia García-Herero describes 10 challenges China’s economy is facing, and analyses how responses so far are not tackling their root issues.
China’s economic problems are structural; the response so far has not tackled the root causes. There is lacking fiscal room, monetary policy constraints, and lacking domestic demand. External geopolitical challenges (including a containment strategy by the second Trump administration), overcapacity, low private consumption, and deflationary pressures require attention of Chinese policymakers. Finally, demographic changes, overinvestment, and a real estate sector that continues to contribute to asset price deflation are affecting economic performance. These challenges require structural reforms, which do not yet seem foreseen.
About authors
Alicia Garcia Herrero
Chief Economist for Asia Pacific at Natixis, Senior Fellow at Bruegel, Non-resident Senior Follow at the East Asian Institute, Adjunct Professor at the Hong Kong University of Science and Technology
Economist specialized in monetary and financial issues in emerging markets, banking crises and resolution strategies, financial development