China’s Economic Woes Deepen: Hang Seng Index Drops 4% Amidst Concerns Over Liquidity and Declining GDP Deflator

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China’s economic woes deepen as the Hang Seng Index plunges 4% in response to another round of disappointing macro data. The persistent question arises: how long until China resorts to injecting substantial liquidity despite its rapidly escalating debt? Concerns grow over the limited list of quality Chinese stocks, given the government’s authority to cease businesses instantly. Even with claims of China’s 5% annual growth rate, critics argue that the declining trend and poor quality of growth remain troubling. The recent fall in China’s GDP deflator, reflecting a 1.5% decline in Q4 2023, raises recession alarms, with weak consumer confidence and a housing market downturn cited as primary factors. Construction starts plummeting by 50% since early 2021 further emphasize China’s vulnerable economic state.

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