Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

China's economy has been struggling to reawaken from an economic shutdown that officially ended last year.

Chinese authorities are now reported to be pressuring economists and analysts

within the country to avoid discussing any negative trends and to avoid using the word deflation

as concerns grow about the leadership's ability to stimulate the economy. In April, consumer

confidence fell back to the lows of 2022,

according to China's National Bureau of Statistics, which then promptly stopped releasing the figure.

Many people, including me, expected to see much more of a recovery in consumption in China as the extreme lockdowns were

brought to an end last year and people returned to normal life. In 2021 when the first lockdown

ended in China, we saw consumption grow around 9%, along with strong exports and strong business investment.

During that period, Chinese GDP grew strongly without a significant increase in the debt burden,

which implies that it was high-quality growth rather than GDP growth driven by malinvestment.

2022, which followed, was obviously a terrible year for China, with the extreme lockdowns

that occurred particularly in cities like Shanghai, where residents couldn't leave their homes.

It seemed reasonable to expect some sort of bounce back this year once the pandemic lockdowns

had ended. Instead, we've seen month after month of bad numbers, weak consumption, weak retail

sales, exports down a little and imports down a lot, which is another sign of low consumption

in China. The country's property sector, which is another sign of low consumption in China.

The country's property sector, which has driven more than 25% of its GDP in recent years,

is in very rough shape.

We've discussed that for a number of years here on this channel.

Property developers who carry debts that come to around 16% of Chinese GDP

...