Posted on 08/11/2023
Consumer prices in China dropped in July, signaling deflation in the country of 1.4 billion people. China’s CPI fell by 0.3% from a year prior. Exports fell by 14.5% year over year and imports also fell 12.4%.
The change may impact McKinsey’s outlook that China’s asset management industry will double to US$ 40.4 trillion by 2030. Household wealth and the country’s pension system was supposed to rise. Chinese citizens’ financial assets were expected to increase at an annualized rate of 9% a year. The report said: “Given the constant rise of domestic deposits and the wealth management segment, pension reform and incremental capital inflow of overseas capital, China’s asset management industry will maintain steady and prudent growth.”
SWFI expressed at the time that the rosy view was suspect: “It has come to the attention of SWFI that many factories in China are currently closed down, with workers outside demanding wages that will never be paid. Certain banks are halting credit cards, and the May labor travel holiday left retailers disappointed as many traveled, but few opened their wallets for discretionary spending. These reports are significant but anecdotal. It will remain to be seen whether McKinsey’s expectation of robust growth is correct.”