China’s prolonged property market crisis continues to drag down economic growth. The economy grew at the slowest pace since 2023 and missed forecasts in the second quarter. This is on top of new home prices falling at the fastest pace in nine years.
The sheer size of the challenge will make it difficult to recover fast, according to Daniel Lacalle, professor of global economy at IE Business School in Madrid. He explains why China is struggling to switch from an export-led and construction-heavy economy to a tech, service, and consumption-led economy. Mr. Lacalle also shared insight into how China can overcome its economic hurdles. He says China needs an open economy and that central planning is not the solution.