Covid-19: China's economic recovery leaves the bottom 60% behind

Topics China | Chinese economy

Most households in the bottom 60%, or those earning less than 100,000 yuan ($14,650) a year, said their wealth declined in the first half of 2020 Photo: Reuters
China doesn't care about its bottom 60 per cent.


The country seems to have bounced back from the Covid-19 slowdown. Exports are growing by double digits, and retail sales, which had been lagging for months, are back to pre-virus levels. But poorer households are still struggling.


The rebound Beijing engineered is K-shaped, exacerbating widening income inequality, which was already a problem before the pandemic.


Most households in the bottom 60 per cent, or those earning less than 100,000 yuan ($14,650) a year, said their wealth declined in the first half of 2020, the China Household Finance Survey finds. “The slowdown in China is becoming quite significant,” says Tommy Wu, senior Asia economist at Oxford Economics. “Both the weakening in the domestic economy and deteriorating external environment, including both a global slowdown, and the US-China trade tensions, have a role to play in China's slowdown.”


Given China's importance in the global economy, and its healthy demand for anything from commodities to machinery, any downturn is likely to have far-reaching consequences.


Gary Hufbauer, of the Peterson Institute for International Economics, estimates that a one percentage point drop in Chinese growth would probably take 0.2 percentage points off global growth.


Beijing to rein in risks in online insurance sector


China's banking and insurance regulator issued draft rules on Monday to rein in risks accumulated in country's booming online insurance sector. The rules, on which the regulator is seeking public feedback till October 28, will ban unlicensed institutions and individuals from participating the online insurance businesses, including selling and offering consultancy services of insurance products, according to a statement released by the China Banking and Insurance Regulatory Commission


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