China’s chances of securing the prime spot among global financial powers are “declining,” according to a former International Monetary Fund (IMF) official.
China is currently the second-biggest economy in the world behind the United States and for years had been tipped to surpass Washington.
However, high public debt and a low birth rate coupled with a struggling real estate market have been undermining Xi Jinping’s efforts to contain economic uncertainty.
Former IMF official Eswar Prasad noted China’s economy now appears to be on an opposite trajectory compared to the United States.
Prasad told Nikkei: “China faces a variety of fragilities, including undesirable demographics, a collapsing real estate market, deteriorating investor sentiment at home and abroad, and the lack of clarity over a new growth mode.
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The China Securities Regulatory Commission held a meeting Sunday focused on stabilising the markets, state-run Chinese media reported.
A notice on its website appeared designed to reassure individual investors who account for more than half of trading volume.
Stephen Innes of SPI Asset Management said in a report: “The situation in the Chinese equity market appears tumultuous, reflecting broader concerns about regulatory uncertainty and government intervention.
“Despite attempts by state authorities to stabilise the market, investor sentiment remains fragile, reflecting deep-seated concerns about the reliability of government policies and the regulatory framework.”
A slowing of China’s economy has also taken a toll. And uncertainty over tensions with Washington isn’t helping.
Former President Donald Trump has threatened to impose 60 percent tariffs on imports of Chinese products at a time when the US already is curbing Beijing’s access to advanced computer chips and other strategically sensitive technologies.
