Chinese Economy Stall

Despite the volatility in the Chinese markets and the stall in their economy, consumer
spending continues to be quite high. The retail sales volumes indicate that consumer confidence
in China remains stable and secure despite other indications of a slowing economy. A Nielsen
survey shows that Chinese consumers are far more worried about work-life balance and their
health than they are about job security. The reasons for their lack of concern is what is baffling.
Suggestions abound as to the reasons why the Chinese consumers appear unconcerned
about the state of affairs of their economy. Fewer Chinese have invested domestically, and the
Communist Party recently declared an expected growth rate of 6.5% to 7%. An alternative
suggestion is that the people trust their government to deliver though it may as well be the state’s
tight management of the media and Internet constrains the ability of journalists to report on the
economy. Whatever the reason, some experts believe news of a stall in the Chinese economy are
overblown.
The Chinese economy has experienced a slump in growth for the first time in over two
and a half decades. In my opinion, the drop could be attributed in part to the volatility of the
Chinese stock market. In late 2007, the Chinese economy experienced a slowdown. In an attempt
to maintain the people’s confidence in the Communist Party, the Government implemented one
of the largest fixed asset investment programs in the world.

Surname 2
The investment was matched by increased investment in real estate. Due to misallocation
of capital and unaffordable property prices, the economy began to take a hit. The failure of the
people to react to the stall in the economy is a result of a combination of all the factors
mentioned above, along with a belief in the ability of their government to turn things around.
China has had stalls before, but not for more than a year or two at a time. This I believe is the
reason for consumer confidence.

Surname 3

Works Cited

Talley, Ian. “What Slowdown? Chinese Consumer Confidence Still Strong”. WSJ. N.p., 2016.
Web. 11 Feb. 2016.