China’s economy faces new challenges: too much production, too little demand

One of the main problems with China’s economic growth in recent years has been the weakening of domestic consumption. For a long time, rapid income growth and a booming real estate market supported Chinese household spending. Now, the mechanism is working in the opposite direction. Falling house prices, slowing income growth and uncertainty about the economic future are pushing people to save more and spend less. The IMF also says that China’s long-term property crisis and weak consumer confidence are squeezing domestic demand.