China’s focus on high-quality development, particularly in its green technology industries like electric vehicles (EVs), may not be the best solution to its economic struggles. The real estate sector, which once accounted for about 30% of China’s economy, has declined, leading to slower economic growth. A report by Goldman Sachs suggests that although industries like EVs can offset the decline in real estate, there will still be a net negative impact on China’s GDP growth. EV production is expected to rise, but it also produces fewer jobs compared to the property sector. Beijing faces the challenge of promoting advanced industries while also addressing the declining property market, which affects consumer confidence and spending. Restoring confidence in the property market and implementing deeper reforms such as better social welfare and healthcare access are crucial. These reforms could contribute to “high-quality consumption” and stimulate the economy. However, implementing such structural reforms is difficult. Additionally, fewer people may be willing to buy from China’s high-quality industries if developed countries continue to restrict trade. Overall, China’s economic recovery depends on stabilizing the property market and implementing necessary reforms.
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