Outlook for China

Apollo Chief Economist

China’s business cycle used to be highly correlated with the US business cycle because of Chinese exports to the US.

But the business cycles in China and the US have decoupled for three reasons:

1) Chinese home prices are falling. US home prices are rising.

2) China’s working-age population is declining. The US working-age population is growing.

3) The US and Europe have imposed tariffs and want to produce more goods at home. This is negative for Chinese exports.

If US growth is about to slow down, then it will magnify the ongoing slowdown in China.

Our latest China chart book is available here.

Beijing home prices falling
Source: BIS, Haver, Apollo Chief Economist
Source: Bloomberg, Apollo Chief Economist
China: Used home prices falling
Source: Bloomberg, Apollo Chief Economist
China: The deflating housing bubble is having a negative impact on GDP
Source: Haver, Apollo Chief Economist. Data as of Q3 2023.
Home price-to-income ratio four times higher in Shanghai than in New York
Source: Numbeo (https://www.numbeo.com/property-investment/rankings.jsp?title=2023-mid), Apollo Chief Economist. Note: Price to Income Ratio is the basic measure for apartment purchase affordability. It is generally calculated as the ratio of median apartment prices to median family disposable income, expressed as years of income.

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