What to do in the economic and construction crisis? With a view to China – opportunities and challenges – Xpert support in the strategy

🏢📉 In the current economic and construction crisis, it is crucial for companies to develop flexible and effective strategies to meet the challenges. Above all, it's essential to understand the root causes and what truly matters.

High energy and personnel costs are particularly burdensome during this period, often described as an “unfavorable phase” in modern business parlance. Retaining qualified employees is of paramount importance for companies, especially in areas experiencing a skills shortage. Layoffs are not an option, particularly for small and medium-sized enterprises (SMEs), as available talent is already scarce.

🤖🤝 Another innovative option is the use of automation and robotics to address labor shortages , reduce costs in the long term, and transform quality.

🤖 One of the biggest challenges in the current situation is the increasing uncertainty in planning.

📝 Strategic thinking is generally essential. Everyone in the solar industry has already realized that continuing as before is no longer an option. In addition to all the existing challenges, planning uncertainty has now been added to the mix. Planning certainty is crucial for companies, as it forms the basis for investment decisions, resource management, budgeting, and the development of long-term strategies. Without this certainty, it becomes increasingly difficult to operate efficiently and manage risks adequately.

🌐 A look at China reveals that this economic powerhouse also faces challenges.

🏢🏢🏢 One example of this is the city of Tianjin, one of China's wealthiest and most modern cities, which nevertheless struggles with high vacancy rates. It is estimated that around 70% of its high-rise buildings are vacant, although precise figures are lacking. Even a vacancy rate of 20% would be alarming. In a healthy real estate market, a natural vacancy rate of 5-10% is considered normal and even necessary to allow for flexibility in tenant turnover and renovations. Higher vacancy rates can indicate various problems, such as excessive rents, outdated building infrastructure, an oversupply of space, or, as is currently the case, an economic downturn.

Related article: ARD/Tagesschau | Tianjin's empty towers: Symbols of an economic crisis in China

🏙️ Vacancy rates in high-rise buildings, especially in urban business centers, can be problematic. This leads to reduced income for the owners and negatively impacts the economic vitality of the surrounding urban area.

📉 In short, the Chinese real estate crisis is severely impacting the country's economy. For years, the real estate sector in China has been experiencing declining sales and rising vacancy rates. Several large construction companies, such as Evergrande, ran into financial difficulties and were unable to repay their debts. This led to a significant loss of confidence among buyers and investors.

🧑‍🎓 One in five Chinese teenagers is looking for work

High youth unemployment in China – Image: Xpert.Digital

🔎👷‍♀️ Unemployment among urban youth aged 16 to 24 – 2023 (in percent)

👩‍🎓 The Chinese government is attempting to mitigate the crisis with state stimulus programs and investments in infrastructure projects. Nevertheless, the economic situation remains tense. Adding to the difficulties is the fact that China continues to struggle with high youth unemployment, exceeding 20%. Many young Chinese people are unable to find suitable employment after completing their studies or vocational training.

Related article: Neue Zürcher Zeitung | China's hidden job crisis: The concealed youth unemployment is so explosive that the Chinese government is withholding the figures.

📣 Similar topics

• 🏢 Challenges in the construction industry: Flexibility and efficiency are key
• 🏗️ Skilled worker shortage in the construction industry: Strategies for employee retention
• 🤔 Planning uncertainty: The dilemma of construction companies in times of crisis
• 🌏 China gripped by the real estate crisis: Lessons for the global construction industry
• 📊 Tianjin's empty skyscrapers: A symbol of economic challenges
• 🏙️ The consequences of urban vacancies: Economic and social impacts
• 🚧 China's construction sector: A battle against declining sales and financial crises
• 📈 Government measures against the real estate crisis: China's strategy under scrutiny
• 👩‍🎓 Youth unemployment in China: A pressing problem in the shadow of the economic crisis
• 🔍 China's hidden job crisis: The reality behind the official statistics

#️⃣ Hashtags: #ConstructionIndustry #EconomicCrisis #SkillsShortage #RealEstateCrisis #PlanningUncertainty #Vacancy #China #ConstructionSector #YouthUnemployment #EconomicPolicy

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The impact of high youth unemployment on the economy is a complex issue encompassing a multitude of factors. Youth unemployment can significantly hinder a country's economic development. This is because young people are considered an investment in a nation's future. Their skills, creativity, and innovation are crucial drivers of growth and progress.

🎓 Shortage of skilled workers

Young people who are unemployed cannot further develop their skills and knowledge, leading to a loss of competence. This not only affects individual career development but also the competitiveness of the entire economy, as companies have less access to talented young workers.

🛑 Secondly: Social costs

Unemployed young people may, out of frustration and lack of prospects, tend towards negative behaviors, which in turn leads to social tensions and weakens social cohesion. In severe cases, this can discourage investment and lead to an unstable business environment.

💸 Thirdly: Impairment of consumption

Young adults who are employed contribute to the economy by purchasing goods and services. However, if they are unemployed, they lack the income to act as consumers, which can lead to lower demand and thus a decline in economic growth.

🏛️ Furthermore: a burden on public finances

More unemployment means higher spending on social benefits and lower tax revenues. In the long term, this can lead to budget deficits and limit the government's financial leeway for investments in education, infrastructure, and other growth-promoting measures.

🧠 Finally: Psychological effects

Long-term unemployment can lead to a loss of self-esteem and mental health problems. This not only affects the quality of life of those affected, but can also have long-term consequences for their ability to work.

📚 Approaches to combating youth unemployment

There are educational programs that ensure young people's skills match the needs of the labor market, as well as programs that promote entrepreneurship and self-employment among young people. Adapting labor market regulations to allow for flexible work arrangements can also help facilitate the recruitment of young people.

High youth unemployment is a warning sign of structural problems in an economy. It requires a coordinated response from governments, educational institutions, and the private sector to break the cycle of unemployment and promote sustainable economic development.

👩‍🏫 Similar topics

• 🔍 Youth as the future: The effects of unemployment
• 🛠️ Loss of skills due to high youth unemployment
• 🚔 Social costs of youth unemployment
• 📉 Impact of youth unemployment on economic growth
• 💼 Youth and the labor market: Opportunities in the crisis
• 🏦 Youth unemployment and its consequences for public finances
• 🧠 Psychological effects of long-term youth unemployment
• 🎓 Education against youth unemployment – ​​time for change
• 💡 Stimulate innovation through young workers
•  🔄 The fight against youth unemployment: measures and strategies

#️⃣ Hashtags: #YouthUnemployment #EconomicDevelopment #SocialCosts #EducationInitiatives #LaborMarketFlexibility

The global energy sector is undergoing a transformation driven by the need for sustainable and environmentally friendly energy production. Solar energy, as one of the key players in this transformation, has experienced tremendous growth in recent years. A significant part of this development can be attributed to massive investments and subsidies in the Chinese solar industry. As one of the world's largest producers of solar modules, China has supported the solar industry with government grants to accelerate innovation and reduce manufacturing costs.

📉 Challenges of overproduction and the construction crisis in China 🏗️

This subsidy policy has led to a flood of inexpensive, high-quality solar modules on the global market, with China as the main exporter. However, this development has not been without its challenges. The construction crisis in China, characterized by overinvestment in the real estate sector, has resulted in overproduction in various industries, including the solar sector. Due to sluggish Chinese markets, the resulting overproduction of solar modules is finding little domestic market share. This is forcing Chinese manufacturers to sell their products on international markets, particularly in Europe, at extremely competitive prices.

🌐 Global impacts and the balance between costs and the local economy 🏭

The flood of inexpensive solar modules from China onto the European market has had both positive and negative consequences. On the one hand, it has led to a reduction in the cost of solar energy, which has accelerated the adoption of this sustainable energy source. On the other hand, it poses a significant challenge for local manufacturers, who struggle to compete with the low prices and high production efficiency of their Chinese counterparts.

🔎 Data access and the implications of the Chinese real estate crisis 📊

The difficulty in obtaining accurate figures and data from China complicates a comprehensive assessment of the situation. Nevertheless, many indicators suggest that the Chinese real estate crisis has the potential to spill over into the financial sector and have far-reaching repercussions for the global economy. The overproduction of solar panels may be just one symptom of a much larger problem deeply embedded in the structure of the Chinese economy.

🏦 Financial stability and the role of the Chinese government 💹

There is speculation that these challenges could be the last gasp before a major economic crisis in China. History has shown that such crises do not occur in isolation; they can trigger chain reactions with global repercussions. The 1997 Asian financial crisis is an example of the contagion effects that a regional crisis can have on the global economy.

The Chinese government now faces the challenge of managing overproduction while ensuring long-term economic stability. This could mean reassessing and potentially reducing subsidies for the solar industry to strike a balance between growth and stability. At the same time, it must find solutions to stabilize the real estate sector and bolster confidence in the financial market.

🌍 International reactions and strategic decisions 🤝

The international community is watching these developments with great interest. Europe, as the main buyer of Chinese solar modules, must consider how to respond to the flood of imports. Long-term strategic decisions are needed to protect its own solar industry without completely foregoing the advantages of inexpensive imports.

🔄 Cooperation and trading strategies: A way forward 🛤️

This situation demonstrates how interconnected and interdependent the global economy is and how local events can have far-reaching consequences. Furthermore, the current situation necessitates stronger international cooperation to balance the opportunities and risks facing the solar energy sector. It is crucial that governments worldwide, together with the private sector, develop robust mechanisms to maximize the economic and environmental benefits of solar energy while minimizing its negative impacts on local markets and industries.

In this context, measures such as tariffs on imported solar panels could be considered to protect local businesses. However, such trade barriers could also slow progress towards greener energy production and increase costs for end users. Therefore, careful consideration is needed to avoid protectionism, which could ultimately do more harm than good.

📣 Similar topics

• 🌞 Solar energy: Engine of the global energy transition
• 🏗️ China's construction crisis and its consequences for the solar industry
• 🌍 Price drop: Chinese solar panels flood the European market
• ⚖️ Balancing act: China between overproduction and economic stability
• 💸 Import flood: A challenge for Europe's solar industry
• 📊 Lack of data: The problem with assessing China's economy
• 🔮 Warning signs: Is China on the verge of an economic crisis?
• 🌐 Chain reaction: Global impact of local economic crises
• 🤝 International cooperation against the solar panel glut
• 🛡️ Tariffs on solar panels: Protection or harm to the environment?

#️⃣ Hashtags: #SolarEnergy #ChinaEconomy #EuropeanMarket #GlobalChainReaction #EconomicCrisis

🐉 China, the rising superpower, is currently experiencing a period of uncertainty. Under the leadership of President Xi Jinping, the country aimed to overtake the United States on the world stage, but now its citizens are facing an unexpected turn of events: the economy is faltering, and hopes for rapid growth are giving way to concerns about a potential recession.

💼 Economic growth, once the backbone of the Chinese Dream, has noticeably slowed. The dream of economic and political dominance appears to be threatened by the decelerating growth rate. Closed shops line the streets, and the mood in the country is somber. Klaus Mühlhahn, a renowned sinologist, describes the atmosphere as "disturbing" on t-online and points to a significant loss of confidence in the leadership.

📉 While the world hoped for a rapid recovery in China after the COVID-19 pandemic subsided, the expected strong growth failed to materialize. Instead, the topic of a potential economic downturn is a central theme in discussions among economists worldwide.

📊 While the National Bureau of Statistics in Beijing reports 5.2 percent growth for the year up to the end of September, which could come close to the Chinese government's 5 percent target, there are indications that these figures don't tell the whole story. A series of measures, including interest rate cuts and subsidized loans, especially for the struggling real estate sector, have been implemented to stabilize the economy. However, the presence of derelict buildings in cities is a silent testament to deeper problems.

📦 Foreign trade, once a strength of the Chinese economy, is also showing cracks. Exports fell by almost 8 percent year-on-year in October, and youth unemployment continues to rise even after the end of strict lockdowns.

🐉 The Chinese leadership is facing a critical test. In an effort to boost foreign investment, it has introduced a policy change allowing citizens from six countries, including Germany, to enter visa-free starting in December. This move, which applies to both business travelers and tourists, represents a notable departure from previous policy and appears to be an attempt to revitalize the economy by opening it up to international influences.

Related article: t-online | China in crisis – The giant is reeling violently

🔐 This measure is symptomatic of a larger shift in Chinese policy, manifested in increasingly restrictive surveillance of its own citizens while simultaneously granting more freedoms to foreign visitors. This paradoxical approach underscores the government's desperation to keep the economy afloat while simultaneously tightening control over its own population.

📊🗺 To grasp the full scope of China's economic challenges, we must consider both short-term measures and long-term strategic plans. It is a time of rethinking and realignment, both for China and for the global economy, which is closely intertwined with the world's second-largest economy.

📣 Similar topics

• 🎶 China's economy is weakening
• 🐉 China is experiencing economically turbulent times
• 👨‍💻 Beijing is trying to stabilize the economy with various measures
• 📰 China's exports are declining
• 😕 The Chinese leadership faces major challenges
• 📈 Economic growth in China is slowing down
• 👀 Experts discuss possible recession in China
• 📉 Real estate sector and domestic consumption are weighing on China's economy
• ✈️ China relaxes entry rules for visitors
• 🤔 China between economic control and opening up

#️⃣ Hashtags: #China #Economy #EconomicStorage #Politics #Globalization

China: National debt from 1995 to 2022 and forecasts until 2028 in relation to gross domestic product (GDP) – Image: Xpert.Digital

👉🏼 💵 China's national debt is rising steadily, reaching an estimated 77 percent of its gross domestic product (GDP) in 2022. The debt-to-GDP ratio is projected to reach approximately 83 percent in 2023. At first glance, this ratio appears moderate by international standards. However, the significant increase in debt is surprising, given that China's GDP has more than doubled in the last ten years.

👉🏼 🏗 The reasons for the rise in national debt are manifold. In recent years, China has invested heavily in infrastructure projects such as roads, railways, and ports. These debt-financed investments were intended to boost economic growth. At the same time, however, China's budget deficit worsened, reaching a record high in 2020. Although it was slightly reduced in 2021, it remains at a high level.

👉🏼 🏦 Another reason for the growing debt is the loose lending practices of Chinese banks. Loans are also granted to high-risk companies and individuals, driving up the number of non-performing loans. A lack of regulation in the financial sector increases the risk of a financial crisis. Should defaults occur, this could trigger a chain reaction and destabilize the entire banking system in China.

👉🏼 ⚖️ To maintain economic stability, the government is forced to continue taking on debt. According to forecasts, public debt will rise to over 90 percent of GDP by 2028. This would push China into the critical zone of high debt levels. Internationally, a debt-to-GDP ratio of 90 percent or higher is considered a sign of impending over-indebtedness.

👉🏼 📈 National debt is expressed in absolute terms in the national currency, Renminbi (CNY). The debt-to-GDP ratio, also known as the debt-to-GDP ratio, indicates the relationship between national debt and GDP. It is an important indicator of a country's financial situation. If government spending exceeds revenue, this is referred to as a budget deficit. The government can finance higher spending by borrowing on the capital market. To do this, it issues government bonds, which are interest-bearing securities.

👉🏼 📝 The interest rate depends largely on the creditworthiness of the country. Rating agencies assess creditworthiness and assign debt ratings. The more reliable a country is considered, the better its rating and, generally, the lower the interest rate. While China's strong economy and foreign exchange reserves currently speak in its favor, its growing debt and the risk of a real estate or banking crisis are viewed critically. China's credit rating, and therefore its refinancing costs, could come under pressure.

China: Real Gross Domestic Product (GDP) growth from 1981 to 2022 and forecasts until 2028 – Image: Xpert.Digital

📈 China's economic development over the past few decades has been impressive. Since the beginning of the reform and opening-up policy in the late 1970s, China has experienced rapid economic growth. According to official statistics, real gross domestic product (GDP) growth in 2022 was around 2.99 percent. Growth of approximately 5.01 percent is projected for 2023.

📉 However, the trend of recent years shows that China's economic growth is slowing. While the growth rate regularly exceeded 10 percent in the 1980s and 1990s, it has steadily declined in recent years. This has several reasons. On the one hand, China's production capacities are increasingly approaching their limits. Many traditional growth drivers, such as exports and infrastructure development, are losing momentum.

👵🌱 On the other hand, China faces major challenges such as demographic change and environmental problems. Due to the one-child policy of the past, Chinese society is aging rapidly. The proportion of the working-age population is declining, while an increasing number of retirees need to be supported. At the same time, China is suffering from severe environmental problems such as air and water pollution. The transition to a more sustainable economy is initially slowing growth.

🔮 According to forecasts, this downward trend in the growth rate will continue. By 2028, GDP growth is projected to decline by a total of 1.6 percentage points to 3.38 percent. This demonstrates that China is transitioning from an emerging to an industrialized economy. As prosperity increases, the need for rapid growth rates automatically decreases.

💡🌱 At the same time, China is striving to improve the quality of its growth. This includes strengthening innovation, sustainability, and domestic consumption. This realignment of the economy towards qualitative growth is also associated with lower growth rates. The focus is now more strongly on issues such as the environment, social equity, and technological progress.

💪🌍 Despite the slowing growth momentum, China remains the world's second-largest economy. Even with more moderate growth rates of around 5 percent annually, China's economic power and geopolitical importance would continue to increase. To remain economically successful in the future, China must master the structural transformation of its economy and establish new growth engines. The coming years will show whether Beijing can manage this balancing act.

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