A Wall Street Journal (gated) piece has a couple of snippets that pour cold water on the large-scale boost expected for China’s economy from new growth drivers such as electric vehicles, batteries and renewable-energy. The property sector debt implosion is just too mammoth and will continue to weigh.
The report cites Goldman Sachs:
- Economists at Goldman Sachs calculate that investment in New Three industries in the years ahead won’t be enough to offset the drag from China’s wider challenges. In a recent report, they estimated that the continuing property slump and declining production of traditional autos would shave 0.5 percentage point off annual growth in the years through 2027—even after accounting for lavish investment in EVs, batteries and renewables.
- The net impact on jobs would also be negative, they found, since construction tends to be more job-heavy than modern manufacturing.
- GS anticipates annual growth in China will slow to around 4.5% this year and 3.7% in 2027
And also Julian Evans-Pritchard, head of China economics at Capital Economics in Singapore”
- “The Chinese economy is still extremely dependent on construction activity,”
- “The reason the economy is still growing at 5% is not because EV exports are booming. That’s just too small.”