The Chinese economy is on the brink of being caught in a “confidence trap” as its post-pandemic recovery begins to slow.
Low confidence combined with a slowdown makes it difficult for the Chinese Communist Party (CCP) to stimulate the economy using standard methods, such as interest rate cuts and infrastructure spending, warned Citigroup economists.
China saw an initial burst in consumer and business activity earlier this year before its economy started to stall again, as Citigroup economists described the nation as “on the brink of a confidence trap,” reported Bloomberg.
“There seems to be a persistent lack of confidence among consumers, homebuyers, corporates, and investors. Weak expectations could be reinforcing each other and become entrenched and self-fulfilling,” said Citibank….