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Why China’s economy is struggling to recover from Covid emergency

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China’s top leaders have acknowledged significant challenges in the nation’s economy as its post-Covid recovery faces obstacles.

Of particular concern is the soaring youth unemployment rate, which reached a record 21.3% in June. Some experts believe the actual rate could be much higher, up to 46.5% in March, when factoring in young people not actively seeking work or relying on their families for support.

The severity of the crisis is evident in the emergence of a new phenomenon called “full-time sons and daughters.” Many young Chinese individuals are paid by their families to stay at home, avoiding the intense competition in the job market and embracing a simpler lifestyle. This trend reflects the struggles they face in securing employment opportunities.

Internationally, there is growing anxiety over China’s economic situation.

While global inflation appears to be slowing, China’s economy is losing momentum, primarily due to sluggish consumer spending. The 24-person Politburo, the highest-ranking officials in the country, convened a meeting and acknowledged the challenges, including insufficient domestic demand, operational difficulties for businesses, and a complex external environment.

To address the economic downturn, the Politburo called for precise and effective macroeconomic regulation, countercyclical policies, and efforts to bolster domestic consumption. The real estate sector, a crucial driver of the Chinese economy, remains in turmoil, with major developers struggling to complete housing projects, leading to protests and mortgage boycotts.

Economic downturn

Despite the disappointing economic data and calls for support measures, the Chinese government has been cautious in its response. The People’s Bank of China cut interest rates, and some assistance was promised to the troubled property sector, but concrete action has been limited. Observers are keenly watching for the policy tone set by top leaders, hoping for indications of significant stimulus measures.

China aims for about five per cent economic growth this year, one of the lowest targets in decades. Achieving this goal will be challenging, as Premier Li Qiang has warned. While some measures have been introduced to promote the purchase of automobiles and boost consumption in artificial intelligence and electronics sectors, a comprehensive stimulus package is yet to be seen.

In conclusion, China’s economy is grappling with serious issues, including soaring youth unemployment and sluggish growth. The government’s response remains cautious, with observers anxiously awaiting any significant policy shifts. The nation’s economic performance will undoubtedly have implications not only for China but also for the global economy.

 

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Traders bet on Bitcoin hitting $100k by end of year

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Surge in Bitcoin prices follows pro-crypto political victories, with traders betting on a $100,000 milestone by year-end.

Bitcoin’s value surged past $90,000 on Wednesday, marking a record high amid investor excitement surrounding a possible cryptocurrency renaissance as Donald Trump steps into his second term as U.S. president.

The election of Trump, who has openly endorsed crypto, has sparked a 30% rise in bitcoin’s price since Election Day, boosted by the success of dozens of congressional candidates supported by crypto-friendly political action committees.

Hitting $100,000

According to Jake Ostrovskis, an OTC trader at crypto market maker Wintermute, traders are betting that Bitcoin could hit $100,000 before the end of the year, with $850 million in options contracts speculating on this milestone by December 27.

The crypto industry, which contributed around $170 million to support candidates viewed as allies, is optimistic about a wave of deregulation and favorable policies.

Trump has promised to establish a national bitcoin reserve and aims to replace SEC Chair Gary Gensler, who has led a strict regulatory approach to crypto.

With aggregate open interest on Bitcoin derivatives soaring to $61 billion, investors are increasingly bullish, betting on bitcoin’s growth via options and perpetual futures contracts.

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Consumer prices rise as Fed weighs December rate cut

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Consumer prices ticked up in October, marking a slight rise after September’s 3½-year low, showing an uneven path for inflation.

Despite the bump, the increase likely won’t deter the Federal Reserve from a possible December interest-rate cut.

The Labor Department reported consumer prices were up 2.6% from a year ago, with core inflation, excluding food and energy, up 3.3%.

Steady consumer spending and hiring may fuel debate on slowing rate cuts early next year.

Investors welcomed the report, betting on a quarter-point rate cut in December.

This response reflects confidence that President-Elect Trump and the Fed will avoid early policy clashes, despite Trump’s pro-lower-rate stance.

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Wall Street rallies as oil prices dip and bitcoin hits new high

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Wall Street started the week on a high note, extending last week’s rally as oil prices fell and bitcoin surged to a new record.

The Dow Jones jumped 1%, reaching over 44,000, with Tesla and big banks leading gains.

Crypto stocks soared as bitcoin hit an all-time high above $82,300, driven by optimism about lighter regulation.

Investors are also focused on upcoming inflation data, which could provide more clues about interest rates.

The dollar remained near a recent peak as Federal Reserve speakers, including Chair Jerome Powell, are set to weigh in later this week.

European markets followed suit, with the pan-European STOXX 600 rising over 1% on Monday.

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