Six Red Flags Pointing to China’s Economy Slowing Down
The People’s Republic of China is the world’s second-largest economy, responsible for one quarter of global GDP growth this millennium—so when the country catches a cold, the world notices.
The past several months have seen an avalanche of bad economic news for China, putting the country’s post-pandemic recovery, and global economic growth, in jeopardy.
In this visualization, we look at six important indicators that point to China’s economy slowing down. Data comes from the National Bureau of Statistics of China, the People’s Bank of China, and the General Administration of Customs, to see what is flashing red.
Six Red Flag Indicators on China’s Economy
China’s annual GDP growth rate has averaged 9% since 1978, when the country opened itself up to the global market under Deng Xiaoping.
However, growth seems to have slowed to a crawl, down to 0.8% (quarter-to-quarter) in the second quarter of 2023 driven by weakness in the Tertiary Sector, which includes retail spending and the troubled real estate sector. This follows a more robust 2.2% figure in Q1, which was driven by pent-up demand released by the end of COVID-era lockdowns.
On an annual basis, China’s GDP expanded 6.3% year-over-year, below the forecasted 7.3% rate.
Exports fell by 14.5% in July, marking the third straight month of declines, and hitting lows not seen since February 2020. Meanwhile, imports fell 12.4%, reflecting the cautious consumer mood.
On a regional basis, exports fell year-over-year to China’s three biggest customers, ASEAN, the EU, and the U.S., by 17.4%, 15.1%, and 20.8% respectively.
There was one bright spot, however: exports to sanction-burdened Russia increased 51.8%, but that wasn’t nearly enough to offset the overall downward trend.
3. Consumer Price Index
The consumer price index moved into deflationary territory for the first time since 2021, with prices falling 3% year-over-year. The decline was led by Household Articles and Services, Food & Tobacco, and Transportation and Communications.
At the same time, the prices that producers paid for industrial products (PPI) fell 4.4% (year-over-year), the tenth month in a row with a negative reading.
4. Youth Unemployment
And while the headline unemployment rate remained steady at 5.3% in August 2023, up slightly from 5.2% the month before, it papers over serious weakness for urban youth, aged 16 to 24.
5. Yuan vs. USD
Given the stream of economic bad news, it’s no surprise that the yuan fell to a 16-year low against the U.S. dollar on August 16, 2023 in offshore trading.
In an effort to stabilize the currency, major state-owned Chinese banks were seen buying up yuan in offshore money markets. At the same time, the spread between the fixed exchange rate set by the People’s Bank of China and the offshore rate, rose to more than 1,000 basis points.
6. New Loans
Adding to the dismal economic mood, people borrowed less money according to the most recent figures provided by the government.
New bank loans fell to ¥346 billion in July, down from ¥3.05 trillion in the month before. This was the lowest reading since late-2009, and less than half of the ¥780 billion economists had forecast.
Foreign Affairs recently published an article with the provocative title “The End of China’s Economic Miracle,” arguing that China’s troubles could be a U.S. opportunity.
And while this may be somewhat premature, the Middle Kingdom has some serious structural issues to contend with, many of them of their own making. Some of the top challenges include crackdowns on the tech sector, a collapsing real estate market, a larger debt crisis, and a shrinking population.
But large-scale government intervention does not appear to be in the offing, beyond exhortations for consumers to spend more and blaming Western media for engaging in “cognitive warfare.”
It’s no wonder that consumer confidence has plunged so low. At least we think so: the Chinese government stopped publishing that too.
Ranked: The World’s Top Diamond Mining Countries, by Carats and Value
Who are the leaders in rough diamond production and how much is their diamond output worth?
Ranked: World Diamond Mining By Country, Carat, and Value
Only 22 countries in the world engage in rough diamond production—also known as uncut, raw or natural diamonds—mining for them from deposits within their territories.
This chart, by Sam Parker illustrates the leaders in rough diamond production by weight and value. It uses data from Kimberly Process (an international certification organization) along with estimates by Dr. Ashok Damarupurshad, a precious metals and diamond specialist in South Africa.
Rough Diamond Production, By Weight
Russia takes the top spot as the world’s largest rough diamond producer, mining close to 42 million carats in 2022, well ahead of its peers.
Russia’s large lead over second-place Botswana (24.8 million carats) and third-ranked Canada (16.2 million carats) indicates that the country’s diamond production is circumventing sanctions due to the difficulties in tracing a diamond’s origin.
Here’s a quick breakdown of rough diamond production in the world.
|5||🇿🇦 South Africa||9,660,233|
|10||🇸🇱 Sierra Leone||688,970|
|18||🇨🇮 Cote D'Ivoire||3,904|
|19||🇨🇬 Republic of Congo||3,534|
Note: South Africa’s figures are estimated.
As with most other resources, (oil, gold, uranium), rough diamond production is distributed unequally. The top 10 rough diamond producing countries by weight account for 99.2% of all rough diamonds mined in 2022.
Diamond Mining, by Country
However, higher carat mined doesn’t necessarily mean better value for the diamond. Other factors like the cut, color, and clarity also influence a diamond’s value.
Here’s a quick breakdown of diamond production by value (USD) in 2022.
|5||🇿🇦 South Africa||$1,538M|
|9||🇸🇱 Sierra Leone||$143M|
|19||🇨🇬 Republic of Congo||$0.20M|
|20||🇨🇮 Cote D'Ivoire||$0.16M|
Note: South Africa’s figures are estimated. Furthermore, numbers have been rounded and may not sum to the total.
Thus, even though Botswana only produced 59% of Russia’s diamond weight in 2022, it had a trade value of nearly $5 billion, approximately 1.5 times higher than Russia’s for the same year.
Another example is Angola, which is ranked 6th in diamond production, but 3rd in diamond value.
Both countries (as well as South Africa, Canada, and Namibia) produce gem-quality rough diamonds versus countries like Russia and the DRC whose diamonds are produced mainly for industrial use.
Which Regions Produce the Most Diamonds in 2022?
Unsurprisingly, Africa is the largest rough diamond producing region, accounting for 51% of output by weight, and 66% by value.
|Rank||Region||Share of Rough|
Diamond Production (%)
|Share of Rough
Diamond Value (%)
However diamond mining in Africa is a relatively recent phenomenon, fewer than 200 years old. Diamonds had been discovered—and prized—as far back as 2,000 years ago in India, later on spreading west to Egyptian pharaohs and the Roman Empire.
By the start of the 20th century, diamond production on a large scale took off: first in South Africa, and decades later in other African countries. In fact between 1889–1959, Africa produced 98% of the world’s diamonds.
And in the latter half of the 20th century, the term blood diamond evolved from diamonds mined in African conflict zones used to finance insurgency or crime.
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