Private investment dropped by 0.2 per cent in the first half of the year from the same period in 2022, in contrast with an increase of 8.1 per cent by state-owned companies.

A narrative war is playing out. The recovery was a whimper, not a bang, and Beijing needs more ammunition to hit its annual growth target, according to overseas economists.

But state media say China is still on the path of recovery, growth spotlights are shining, and they claim “bearish talks” on China’s economic growth have never panned out and will inevitably be proven untrue again.

With vows to improve the rule of law, remove non-market barriers, and push the private sector to be “bigger, better and stronger” – a slogan long enjoyed by their state rivals – the real question is how much progress will be made instead of merely playing lip service.

The new initiative is expected to improve the sentiment within the sector, to some extent, as Beijing views it as the main engine for growth, but some pundits said the most powerful measure would be a firm pledge from the leadership that “private property of citizens should be inviolable.”

Also a part of the new policy package to heal the ailing economy, Beijing released an 11-point plan to encourage household consumption this year and said more measures will be introduced soon.

The country is also looking to unleash the potential for new growth engines.

Apart from the daunting economic challenge, China is also facing an embarrassing situation that threatens to hurt its international image.

Experts are calling for more policies to spur growth and lift confidence, and all eyes are on the Politburo meeting at the end of this month when top leaders will assess the economic situation and lay out priorities for the rest of the year.

60-Second Catch-up

Deep dives

China jobs: trash inspector with a master’s degree shows how ‘education reform is imminent’

• China’s people are highly educated, so where is the ‘talent dividend’? For many fresh graduates, ‘settling for an opportunity’ is the safer bet now

• China’s unemployment rate among those aged 16-24 continued its monthly rise in June, reaching 21.3 per cent

This is the first in a series on how a tumultuous first half of 2023 featured economic pitfalls and headwinds that have left China struggling to shake off years of Covid-induced rust.

At 25 years old, Liu Maomao is no longer considered youthful by labour-demographic standards. And that means her unemployment is not reflected in the worsening job market among the 16-24 “youth”.

China population: ‘self-aware’ DINK couples, with no kids, could prolong demographic crisis

• Many young couples in China are shunning government handouts and incentives to live a life unburdened by children, and the falling birth rate has economic implications

• Population researcher also points to declining marriage rate as evidence ‘China will very likely see its low fertility rate remain low in the coming decades’

When Zhang Chengying first told her parents that she and her husband would not be having children, the reaction was one of shock as they asked Zhang if there was something wrong with her.

China’s paltry support for private sector leaves its economic backbone in more dire straits than state firms

• Beijing’s support for the private sector is increasingly being perceived as lip service in the absence of more action

• With state giants faring better than their private counterparts, an official charm offensive could be wearing thin, and it threatens to slow China’s post-Covid recovery

Despite receiving more orders than last year, a literal door maker in China’s southwest is struggling to open enough figurative doors to make ends meet.

Besides cutting labour costs, the company – a privately held industry leader in the region – has opted to cut profit margins to grab a bigger market share amid an uneven recovery of the world’s second-largest economy.

China trade: tough times for exporters as ‘only the wearer knows where the shoe pinches’ amid tumbling shipments

• Exports suffered their biggest decline since the start of 2020, while imports also contracted more than expected

• Weak exports, caused by falling global demand, have increased the pressure for Beijing to boost domestic consumption in the rest of the year

A manufacturer and exporter of baking equipment based in Yiwu – home to the world’s largest small commodities market – had high hopes of a strong rebound when China reopened its borders to foreign travellers in January.

But David Fang’s hopes have gradually faded, despite endless streams of foreign importers coming to the city in the eastern Zhejiang province, and he embodies China’s trade outlook after exports tumbled by 12.4 per cent in June compared to a year earlier.

China steps in with vocational school overhaul and 11 ‘key tasks’ to help boost self-sufficiency and tech prowess

• Regional pilot programmes will be set up, and progress will be closely monitored to ensure local authorities are doing enough to bolster the hi-tech talent pool

• But education researcher warns that plans are at risk of being put secondary to short-term and superficial political achievements

Education authorities say a nationwide revamp is needed in the way China supports and grows its occupational training system – especially in strategic industries – as a shortfall of skilled engineers and blue-collar workers is curbing the nation’s industrial upgrades and economic aspirations.

To that end, education overseers have issued a list with 11 “key tasks” for local-level authorities to use as basically an occupational-training road map – and their progress will be carefully monitored each year.

Tencent billionaire founder Pony Ma hails China’s new plan to boost private economy after tech crackdown

• Just hours after China unveiled an action plan to invigorate its economy, the state broadcaster published an article written by Ma

• Ma pledges on behalf of the internet industry to fulfil the government’s latest strategies and goals to support private businesses

Tencent Holdings’ usually low profile founder and chairman Pony Ma Huateng has sung the praises of the Chinese government’s latest economic guideline, breaking his silence after the gaming and social media empire suffered years of regulatory hostility.

Beijing talks up ailing property market with upbeat assessment after data shows housing demand remains weak

• A senior government official says Beijing’s austerity measures to de-leverage the property sector could pave the way for healthy growth in the market

• Comments emerge after home transaction volumes in 330 cities dropped 19.2 per cent in the year to June and their value plunged 23.4 per cent

The ongoing clean-up in China’s property sector – which accounts for 8 per cent of the world’s second largest economy – has made markets turbulent, but these are temporary setbacks and a resolution is around the corner which could be a harbinger of long term stability for the industry.

A senior government official said on Monday that Beijing’s austerity measures to de-leverage the property industry could take effect in due course, and this may pave the way for healthy growth in the market.

JD.com, Tencent, Longfor slump in Hong Kong sell-off as China shows no stimulus urgency, Wall Street banks cut GDP targets

• Some Wall Street banks trimmed their GDP forecasts after growth last quarter trailed market consensus

• Beijing has refrained from unleashing big stimulus measures amid concerns about debt, fiscal overreach, Manulife Investment said

The Hang Seng Index slid 2.1 per cent to 19,015.72 on Tuesday from Friday’s closing level. Stocks and futures were halted on Monday on a typhoon warning. The Tech Index declined 2.4 per cent while the Shanghai Composite Index slipped 0.4 per cent.

Global Impact is a weekly curated newsletter featuring a news topic originating in China with a significant macro impact for our newsreaders around the world.