China's economic downturn is more shocking than outsiders realize, says former Chinese property mogul

Desmond Shum has informed The New York Times that the economic situation in China is even more dire than previously believed. The sale of essential goods is at an all-time low due to the approaching deflation of consumer prices. Consequently, Beijing will exert greater authority over companies as their stability diminishes.

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The state of the Chinese economy is more severe than what the global population perceives, according to a property entrepreneur who has chosen to live abroad. The informant shared this information with The New York Times.

As per Desmond Shum, who previously held a top position in a massive development company but quit in 2015 due to increased supervision from Beijing, there has been a decline in sales across various sectors, including those believed to be unaffected by any downturn. Chinese consumers are facing such a grim economic situation that executives are now witnessing open instances of theft committed by their own employees.

"He shared that numerous revelations have surprised me during my discussions with Chinese entrepreneurs," he remarked. "A prominent dairy corporation has escalated its production of milk powder due to a decline in milk purchases. Traditionally, this wouldn't be the primary item to be eliminated."

Shum's portrayal of the circumstances happening in China gives us a glimpse into the lackluster progress in economic growth, as the nation's rebound from the pandemic has significantly lost its spark since the initial three months.

Newly released data reveals that the Chinese manufacturer price index experienced its sharpest decline in seven years in the previous month, while consumer prices currently hover dangerously close to falling into deflationary territory for the first time since 2021.

The struggling economy has also become apparent in the increasing number of young people who are unable to find work. In May, more than 20% of individuals between the ages of 16 and 24 were without employment. At the same time, the property market is being negatively impacted by the heavy load of debts, which is adding to the challenges faced by the economy in its quest for new growth.

These elements have already led Beijing to take swift action, as the People's Bank of China has implemented measures to lower interest rates in order to stimulate economic growth.

However, according to Shum, the current circumstances are also causing the nation's key leaders to feel uncertain, leading to increased regulation of the country's business environment, particularly for international companies. For example, companies affiliated with Western interests are at risk of sudden inspections, while foreign establishments are encountering new limitations on data usage.

According to him, this is leading to a substantial retreat of multinational companies from China, which has the capacity to alter the existing trade system apart from the nation.

"Debates revolve around the concept of 'deglobalization,' however, it is more accurate to refer to it as 'reglobalization without China,' explained Shum. Instead of a single country taking over China's role, we are observing a dispersion of operations to countries like Vietnam, Indonesia, Sri Lanka, India, and various other locations."