PROVIDENCE, Rhode Island: In a world beset by multiple crises, officials may be looking past the biggest threat of all: China.
The talk among central bankers at the Jackson Hole Federal Reserve Conference focused on inflation and rising interest rates. Absent was any mention that just 10 days beforehand, the People’s Bank of China did exactly the opposite, unexpectedly cutting its key interest rate.
China is beset by three distressing Ds: Debt, disease and drought. They belie a slowdown that is not raising sufficient alarm bells among investors and policymakers. China remains heavily integrated into the global supply chain and is a potential driver of global demand as one of the biggest markets for foreign goods and services.
But economic news from China has gone from bad to worse. Manufacturing contracted in July, retail sales, industrial output and investment all slowed and youth unemployment reached nearly 20 per cent.
There has been a record outflow of portfolio investments via the Stock and Bond Connects. More than 20 per cent of American multinationals are pessimistic about the five-year business outlook, more than double the percentage last year, according to a US-China Business Council poll.
The median 2022 gross domestic product forecast was recently cut to 3.5 per cent, in a country that was growing at 6 per cent two years ago.