Huawei Phones Sales Crash in China; Steep Drop in Sales, Samsung Considers 30% Layoffs

Summary

The video script discusses the significant decline in Huawei's smartphone sales, with once high-demand models like the Mate 60 Pro experiencing a drastic drop in value. It also touches on the broader economic challenges in China, including a 32.9% plunge in the domestic smartphone market and Samsung's market share and production cuts. The script further explores China's economic downturn, with deflationary pressures, high unemployment, and the real estate market's persistent slump. It concludes with commentary on the Chinese government's economic policies and their impact on the country's economic outlook.

Takeaways

• 📉 Huawei's smartphone sales have significantly declined since April, with even flagship models like the Mate 60 Pro experiencing a sharp drop in market price.
• 📱 The value depreciation of Huawei phones is rapid, leading to a 'buy high, sell low' scenario, which is affecting consumer purchasing decisions.
• 🏢 Samsung, a major player in China's smartphone market, has seen its market share and sales drop, leading to facility closures and layoffs.
• 📊 China's domestic smartphone market has experienced a 32.9% decline, affecting not only high-end brands but also budget-friendly options.
• 💰 Economic factors such as tightening budgets and reduced consumer spending are contributing to the poor sales of smartphones in China.
• 🌐 The economic downturn is not limited to smartphones; it extends to other sectors like real estate, liquor, and consumer goods, indicating a broader market issue.
• 📈 Despite being recognized as socially responsible, foreign companies like Samsung and others are underreported in Chinese media, which could impact their market presence.
• 📉 The Chinese white liquor sector, including renowned brands like Lu Lao Jiao, is facing a significant slowdown in sales, with stock prices and market demand dropping.
• 💼 Layoffs and business adjustments in companies like Samsung are attributed to increased competition and a weak domestic demand, signaling a challenging economic environment.
• 🌐 China's economic challenges are multifaceted, with deflationary pressures, high unemployment, and trade tensions contributing to a prolonged economic downturn.

Q & A

Why are Huawei phones not selling as well as before?

Huawei phones are struggling to sell due to various factors, including a sharp drop in demand for smartphones in China, economic downturns, and tightening consumer budgets. Even with significant price reductions, Huawei phones, which were previously marketed with patriotic appeal, are now facing challenges in attracting buyers.

How has the price of the Huawei Mate 60 Pro changed over time?

The market price of the Huawei Mate 60 Pro has plummeted significantly. Within just over a month, the value of the phone has dropped by 1,000 to 2,000 yen, reflecting the larger market challenges Huawei is facing.

What are some reasons consumers prefer Apple phones over Huawei?

Consumers prefer Apple phones because Huawei phones are perceived to lose value faster. There is also a perception that Apple products maintain their value better, making them more appealing for long-term investment.

How has the overall Chinese smartphone market been performing in 2024?

The Chinese smartphone market has plunged by 32.9% in 2024. This drop affects both high-end brands like Apple and Samsung, as well as budget-friendly options like Xiaomi. The economic downturn and tighter consumer budgets have reduced the demand for smartphones across the board.

Why did Samsung lay off employees in China despite leading global smartphone shipments?

Samsung's layoffs in China are due to intensified competition from domestic brands, weak domestic demand, and an economic downturn. While Samsung still leads globally in smartphone shipments, the company's sales in China have declined, prompting significant restructuring and layoffs.

What impact has the economic downturn had on foreign companies like Samsung in China?

The economic downturn in China has led foreign companies like Samsung to reduce operations and lay off employees. Samsung has closed several production facilities and continues to adjust its business due to weakening domestic demand and competition from local brands.

How is deflation affecting consumer spending in China?

Deflation is causing consumers to cut back on non-essential spending, including smartphones. Rising prices for essentials like food, driven by adverse weather, are leaving consumers with less disposable income to spend on luxury goods, contributing to the decline in smartphone sales.

What challenges are faced by other high-end industries in China, such as white wine producers?

Like the smartphone market, China's high-end industries, including white wine producers, are facing a significant decline in demand. Luxury liquor brands like Luo Lao Jiao and Moutai have seen sharp price drops as consumers cut back on spending, resulting in a challenging market for premium products.

Why are foreign companies in China receiving little recognition for their contributions to the economy?

Despite contributing significantly through job creation and taxes, foreign companies like Samsung and Tesla receive little positive coverage in Chinese media. This lack of recognition reflects a broader trend where media outlets often avoid reporting on foreign enterprises' achievements.

What long-term risks does China's economic deflation pose according to economists?

Economists warn that China's ongoing deflation could lead to a spiral of falling prices and wages, reducing consumer spending and investment, which could further slow economic growth. Prolonged deflation risks triggering widespread business bankruptcies and higher unemployment, worsening the economic situation.

Outlines

00:00

📉 Decline in Huawei Smartphone Sales

The script discusses the significant drop in Huawei's smartphone sales, particularly after April of this year. Despite the patriotic appeal and previous high demand for their foldable phones priced over 7,000 yen, sales have plummeted. The Nova Pro, once in high demand, has seen its price drop to over 4,000 yen with no significant sales boost. The owner of a Huawei flagship store notes the rapid depreciation of Huawei phones and the public's preference for Apple phones. The script also mentions the drastic reduction in the market price of the Huawei Mate 60 Pro, which has fallen by 1,000 to 2,000 yen in just over a month. This trend is not isolated to Huawei, as the entire domestic smartphone market in China has seen a 32.9% decline, with consumers tightening their budgets and showing reluctance to spend on smartphones.

05:03

🛠️ Samsung's Layoffs and Market Challenges in China

The script highlights Samsung's struggles in the Chinese market, with plans for layoffs and business adjustments due to intensified competition and an economic downturn. Despite being recognized as a socially responsible enterprise in China, Samsung's mobile business has been impacted, leading to a reduction in its workforce. The company's sales department is expected to face a 30% staff reduction by 2025. The script also discusses the broader trend of foreign companies leaving China and the lack of media coverage for their positive contributions. Economic indicators such as the Consumer Price Index (CPI) and sales data for moon cakes and white wine reflect the weak demand in the Chinese market, suggesting that the economic downturn is affecting various industries.

10:04

📉 China's Economic Downturn and Deflation Risks

The script delves into China's economic challenges, including a significant slowdown in the white liquor sector, with brands like Lu Lao Jiao and Moutai experiencing price drops and production decreases. The mid-autumn festival, typically a boost for liquor sales, has seen no significant increase in demand or prices. Analysts attribute this to insufficient purchasing power and an oversupply of premium liquors. The script also discusses the broader economic issues, such as deflationary pressures, prolonged weakness in the real estate market, high unemployment, and escalating trade tensions. International attention has been drawn to China's economic situation, with core inflation rates remaining below 1% for 18 consecutive months. Experts warn of the potential for a deflationary spiral and call for aggressive policy measures to address the economic downturn.

15:04

🏛️ China's Economic Policy and Market Response

The final paragraph discusses the Chinese government's economic policies and their effectiveness in addressing the economic downturn. The People's Bank of China has taken measures such as lowering the required reserve ratio, but critics argue that these actions are more psychological reassurance than substantive solutions. The script points out that the Chinese Communist Party's stimulus measures have not addressed the root causes of the economic issues, such as authoritarian politics, corruption, and loss of public confidence. The economic outlook continues to worsen, with deflation expectations leading to a rebound in bonds and concerns over banks' exposure to interest rate risks. The script concludes with a warning from experts that China may need more significant stimulus measures to break the cycle of debt deflation.

Keywords

💡Huawei

Huawei is a leading global information and communications technology (ICT) solutions provider, known for its smartphones, network equipment, and consumer electronics. The company has faced challenges due to U.S. sanctions, which have impacted its access to certain technologies and components, affecting its smartphone sales. However, Huawei continues to innovate and has introduced new products like the Mate 60 Pro and the Nova series, which have been driving its sales in China. Huawei's HarmonyOS is also a key part of its strategy to maintain a competitive edge in the market.

💡Smartphone Sales

Smartphone sales refer to the distribution and purchase of mobile phones that are equipped with advanced computing capabilities. The script mentions a significant drop in smartphone sales, including Huawei models, which is attributed to various factors such as economic downturns and consumer preferences shifting towards other brands like Apple. The sales figures are crucial for understanding market trends and the success of different smartphone models.

💡Patriotic Appeal

The patriotic appeal mentioned in the script refers to the marketing strategy where Huawei phones were promoted as a symbol of national pride, which previously boosted their sales. This approach is not as effective now, indicating a change in consumer behavior and the challenges Huawei faces in maintaining its market position.

💡Kirin Chip

The Kirin chip is a series of mobile processors designed by Huawei's subsidiary HiSilicon. These chips are used in Huawei smartphones and are known for their performance capabilities. The script mentions the Nova Pro featuring a Kirin chip, which is an example of Huawei's efforts to maintain product quality despite external pressures. However, the sales of these chips have been affected by the company's challenges, impacting the overall sales of Huawei smartphones.

💡Depreciation

Depreciation in the context of the script refers to the decline in the value of Huawei smartphones over time. This is a common phenomenon in the tech industry where the value of devices decreases as newer models are released or market conditions change. The rapid depreciation of Huawei phones is mentioned as a reason for their decreased sales.

💡Market Saturation

Market saturation is a state where the market is full of existing products and no further growth is possible. The script implies that the smartphone market, particularly in China, is becoming saturated, leading to a decline in sales across all brands, including Huawei.

💡Economic Downturn

An economic downturn refers to a period of negative growth in an economy, often characterized by reduced consumer spending and increased unemployment. The script suggests that the economic downturn in China is contributing to the decline in smartphone sales, as consumers are less willing to spend on non-essential items like smartphones.

💡Consumer Spending

Consumer spending refers to the amount of money consumers spend on goods and services. The script highlights that reduced consumer spending due to tightening budgets is a significant factor contributing to the decline in smartphone sales, including those of Huawei.

💡Deflation

Deflation is an economic phenomenon where a general decline in prices occurs, often due to a reduction in the supply of money or a decrease in demand. The script discusses deflationary pressures in China, which can lead to lower sales as consumers delay purchases in anticipation of further price drops.

💡HarmonyOS

HarmonyOS is Huawei's proprietary operating system developed in response to restrictions on using Google Mobile Services (GMS). The script mentions HarmonyOS in the context of Huawei's efforts to differentiate its products and maintain a competitive edge in the market despite challenges. The operating system is a key component of Huawei's strategy to control its software ecosystem and provide a seamless experience across devices.

Highlights

Huawei phones, once in high demand, are now struggling to sell despite having competitive features like Kirin chips.

The Huawei Nova Pro, which previously sold well at over 7,000 yen, has seen a significant price drop to over 4,000 yen but still faces poor sales.

Smartphone sales have plummeted since April, with even patriotically marketed Huawei phones failing to sell.

Huawei phones are losing value quickly, leading to a 'buy high, sell low' situation in the market.

The market price for the Huawei Mate 60 Pro has plummeted by 1,000 to 2,000 yen in just over a month.

The Huawei P50 Ultra's price has also seen a steep decline, originally priced at 99,999 yen and now significantly reduced.

The domestic smartphone market in China has seen a 32.9% drop, affecting brands like Apple, Samsung, and Xiaomi.

Chinese consumers are tightening budgets and are reluctant to spend on smartphones, leading to unsold models.

Samsung, once the largest Android smartphone supplier in China, has seen a significant drop in market share from 20% to 19%.

Samsung has closed several production facilities in China and is considering further layoffs and business adjustments.

Samsung's layoffs in China are attributed to intensified competition and an economic downturn.

China's Consumer Price Index (CPI) in August grew by 0.6% year-on-year, indicating weak domestic demand.

The moon cake market in China has shown a concerning trend, with consumers cutting back on spending.

Luo Lao Jiao, a renowned Chinese liquor brand, has experienced a significant slowdown in performance and a drop in stock price.

The Chinese white wine sector is in decline, with top-tier liquors not experiencing the usual price hikes or demand surges.

China's economy has struggled to gain momentum in the second half of the year, with deflationary pressures becoming more entrenched.

China's core inflation rate has stayed below 1% for 18 consecutive months, indicating a persistent economic downturn.

The Chinese government's stimulus measures have failed to address the root cause of the economic downturn.

Transcripts

why are Huawei phones not selling now

previously when the foldable phone was

priced over 7,000 yen it was in high

demand take a look at this phone the

sleek and attractive Nova Pro which is

now dropped to over 4,000 un and

features a Kieran chip why is it not

selling this is an observation from the

owner of a Huawei flagship store since

April of this year smartphone sales have

plummeted drastically and even Huawei

phones which were previously marketed

with a patriotic appeal are now

struggling to

sell the situation looks bad earlier

this year before April we couldn't even

get phones priced over

7,000 now even at 5,500 they're not

selling I'm really confused about what

went wrong it's clear now why people

prefer Apple phones Huawei phones lose

value fast I finally understand what it

means to buy high and sell low phone

prices go up with demand but when prices

drop no one wants

kind of like what's happening in real

estate basically if you have Huawei

phones that are losing value sell them

quickly on July 14 the secondhand phone

dealer and blogger free Mine Tech Yen

mentioned that huawei's situation has

deteriorated significantly recently with

the mate 60 Pros market price plummeting

severely he recently reported on social

media that Huawei is facing significant

Market challenges particularly with a

Huawei mate 60 Pro the the value of this

model has dropped by 1,000 to 2,000 in

just over a month once highly sought

after at the end of last year with

prices even exceeding market value the

current situation paints a starkly

different picture now it seems there's

little Demand with recycling prices

falling from around 6,000 yen to just

over 4,000 unen this downward trend is

consistent across all Huawei brands with

prices depreciating rapidly over the

past couple of months another tech

blogger highlighted that the price of

the Huawei Pura 70 Ultra is also on the

Steep decline originally priced at

99,999 a figure that many found

excessive it has since dropped

considerably the speed and magnitude of

huawei's price reductions have outpaced

those of other top tier Flagship phones

in fact Huawei situation is not an

isolated case recent data reveals that

the domestic smartphone market has

plunged by

32.9% whether it's high-end Brands like

Apple and Samsung or budget friendly

options like xiaomi phones across the

board are struggling to sell in China

currently fewer Chinese consumers are

willing to spend on smartphones due to

tightening budgets this reluctance to

spend has led to unsold Huawei mate 60

and Apple iPhone 15 models forcing them

to cut prices this phenomenon was

unprecedented in the past during

pre-sale of Apple iPhone 14 consumers

eagerly awaited and often had to wait

months for a popular model however with

the release of the Huawei mate 60 and

Apple iPhone 15 even though consumers

are interested they're not willing to

pay contributing to a cold spell in the

smartphone industry in

2024 the ongoing downturn in the

smartphone market has now extended to

South Korea Samsung a major player in

the Chinese market in 2013 Samsung was

the largest Android smartphone supplier

in China with its market share peaking

at 20 % however since 2018 the company's

sales in China have been on a decline

due to the country's economic downturn

and weak domestic demand although recent

reports indicate that Samsung still

holds the top spot in China's smartphone

market with a 19% share this is a

significant drop compared to its Peak

Performance in recent years Samsung has

closed several production facilities in

China including smartphone and computer

factories relocating operations to

countries like India and Vietnam this

shift resulted in significant layoffs

affecting China's economy despite these

changes Samsung has not completely

exited the Chinese market and continues

to operate some business

activities however in late August

Samsung announced further plans for

layoffs and business adjustments

signaling ongoing challenges for the

company in

China Samsung is starting to lay off

employees again which isn't a positive

sign at its ke Samsung had over 60,000

employees in China but now that number

is down to fewer than 20,000 if their

smartphone business is struggling it's

noteworthy that Samsung still leads

globally in smartphone shipments this

year so why the layoffs in China is it

due to the sluggish Market is Samsung

considering exiting the Chinese market

according to a September 4th report by

the so economic daily Samsung

Electronics plans to cut 8% of its

Chinese sales department staff about 130

people the layoffs are attributed to

intensified competition and economic

downturn which have weakened domestic

demand and made the company's future in

China more uncertain the company is

implementing extreme restructuring

measures to ensure

survival however some online

commentators suggest there might be

other reasons behind these layoffs one

commentator

mentioned analyzing the reasons for

Samsung's layoffs reveal is a deeper

warning firstly it's argued that Samsung

survival is challenged by Fierce

competition from Chinese domestic Brands

leading to poor sales the data shows

that Samsung's overall industry sales

are on an upward Trend as a conglomerate

Samsung is not solely dependent on its

mobile business so despite the impact on

its smartphone division it won't face

severe issues Samsung sales in China

have consistently ranked among the top

making it an exaggeration to claim they

are outperformed by domestic Brands

another aspect is China's environment

Samsung is annually recognized as the

most socially responsible foreign

Enterprise in China yet this is rarely

reported in the media this lack of

coverage reflects a broader Trend in

Chinese media which often avoids

positive stories about foreign companies

including Tesla and

BMW despite building numerous factories

creating jobs and contributing taxes

foreign companies of received little

credit with China's economic downturn

it's expected that the trend of foreign

companies gradually leaving China will

become more

frequent currently industry sources

suggest that Samsung Electronics China

has issued restructuring notices to

sales department employees and is

accepting voluntary resignation

applications essentially signaling that

layoffs are imminent an Insider from

Samsung revealed to the media that this

round of layoffs is just the beginning

with an ant anticipated reduction of up

to 30% by next year the primary reason

Remains the poor sales of Samsung

products in China such as smart TVs and

phones Samsung China responded that the

layoffs are part of necessary business

adjustments and Personnel optimization

to improve organizational efficiency and

Market competitiveness the company

confirmed the speculation that it plans

to reduce its sales department staff in

China by 30% by

2025 for many Samsung employees this

news is shocking but given the current

economic conditions in China it was

somewhat

anticipated according to data released

by The National Bureau of Statistics on

September 9th China's Consumer Price

Index CPI in August grew by 0.6% year

on-ear slightly below the 0.7% forecast

by reuter's analysts the increase was

primarily driven by adverse weather

pushing up food prices which forced

consumers to spend more on Essentials

rather than on Revival in domestic

demand excluding volatile food and

energy costs the core Consumer Price

Index Rose by only

0.33% the lowest level since March 2021

indicating that overall demand in the

Chinese market remains weak in fact

recent sales data of moon cakes in the

Chinese market reveals a concerning

Trend traditionally during the festive

season in China consumers would buy moon

cakes in large quantities driven by the

festive atmosphere however the moon cake

Market has recently shown an unusual

pattern a business owner who sells

mid-autumn Festival gift boxes

said this year has been the toughest in

the past 5 years I'm not sure if other

business owners feel the same let's look

at it from the customers perspective for

instance people who bought moon cakes

last year or in previous years may not

need them this year or they've cut back

on spending larger clients tend to show

this shift more than smaller clients

corporate customers like hospitals

training institutions 4S shops insurance

companies and real estate firms

typically buy moon cakes but this year

some aren't planning to give mid- Autumn

gifts at all While others are still

giving moon cakes but deducting the cost

from employees paychecks so a 100 yen

gift box from last year is now being

replaced with one worth just 35 to 40

Yen similarly the white wine market is

also facing a sharp decline luo laao a

renowned Chinese liquor brand known for

its guiao 1537 liquor hailed as a living

cultural Relic and a standard gray

Chinese liquor however it too is

experiencing significant sales issues

this year the company became the worst

performer among white wine producers

according to reports from September 8th

luo Leo jao's stock price has dropped

over 36% far surpassing the declines of

other liquor companies such as mulai

Wulan

ifu on September 5th its stock price hit

a new low for the year with its market

value plummeting from over 450 billion

un 3 years ago to around 160 billion un

now the primary reason for this drastic

drop is a significant slowdown in

performance it's not just luo Lao Jiao

the entire Chinese white wine sector is

in Decline mulai China's leading white

liquor brand is also seeing a price drop

as of September 5th the wholesale price

of a bottle of fettia M Thai is 2,610

Yen down 10 Yen from the previous day

typically the approach of the mid-autumn

festival boosts traditional white liquor

sales however this year the market for

top tier Liquors including various

multiproducts has not experienced the

usual price hikes or demand surges

instead prices have been fluctuating

recently with no significant Rebound in

market demand one distributor commented

that this year's mid-autumn Market is

experiencing the coldest liquor prices

in the past decade several industry

analysts believe that the main issue for

the white wine sector is insufficient

purchasing power as the supply of

Premium liquers increases their scarcity

decreases and if demand growth lags

price pressures will continue to rise

the real Market consumption has dropped

even more sharply than production

according to financial news in 20 23 the

white wine production capacity was 6.3

million tons only 46% of that in

2016 from 2019 to 2023 China's white

wine production capacity decreased by

about 20% meanwhile the total inventory

of 20 listed white wine companies on the

aare market reached 133 billion un and

149 billion in 2022 and 2023

respectively compared to just 91 billion

Y in

2019 a Chinese commentator noted that

this situation is quite normal as these

high-end liquor Brands aren't typically

consumed by the average person when

ordinary people buy this liquor it's

more for the status symbol than for

drinking despite heavy promotion sales

are bound to decline because any bottle

priced under 500 Y is bound to give you

a headache most regular consumers prefer

cheaper bulk liquor which they believe

is better than these expensive Brands

given this the commentator questioned

how these Brands could expect their

sales to

increase Michelle Lamb a greater China

Economist as Society General believes

that deflationary pressures on China are

becoming more entrenched which could

lead to a spiral of falling prices and

wages she warns that more aggressive

policy measures are needed to address

the situation despite attempts by the

Chinese authorities to obscure the full

extent of the economic downturn official

data still paints a bleak picture with

prolonged weakness in the real estate

market high unemployment mounting local

debt and escalating trade tensions

China's economy has struggled to gain

momentum in the second half of the year

the sharp decline across various

Industries has attracted significant

International attention in August

China's core inflation rate increased by

just

0.3% marking the 18th consecutive month

that inflation has stayed below 1%

Bloomberg noted the surprising speed at

which China's price Outlook is

deteriorating

Bloomberg forecast that due to weak

wages and demand the price decline in

China is expected to continue into

2025 analysts at BMP parabus Echo this

sentiment predicting that China's GDP

deflator an important measure of

economic price changes will continue its

downward Trend into

2025 this could Mark the longest period

of deflation since China began recording

data in 1993 the GDP deflator is a

broader economic price measure and using

the this data provides a clearer picture

of China's economic

situation the persistent downturn in

China's real estate sector now in its

third year has stifled domestic demand

while intense competition in

manufacturing has driven prices down

even further despite efforts by Chinese

officials to suppress discussions about

deflation and warnings to analysts to

avoid using such data the issue has

entered public

discourse former Chinese Central Bank

Governor y gang acknowledged the growing

threat of deflation on September 6

stating that eradicating it should be a

top priority for policy makers this rare

admission highlights the seriousness of

falling prices on China's economic

Outlook and ye stressed the need for

Urgent action to alleviate deflationary

pressures similarly Morgan Stanley's

Chief China Economist Robin Shing

highlighted the severity of China's

economic deflation stating we are

definitely in deflation and probably

going through the second stage of

deflation experience from Japan suggests

that the longer deflation drags on the

more stimulus China will eventually need

to break the debt deflation challenge

China now faces the risk that deflation

could snowball with wages declining

households are cutting back on spending

and delaying purchases in anticipation

for further price drops this reduces

business Revenue dampens investment and

leads to more layoffs eventually causing

bankruptcies among both families and

companies surveys show that this

situation is already unfolding according

to an August survey by kaien Insight

group in business Big Data primary wages

in favored economic sectors such as

electric vehicle manufacturing and

renewable energy have fallen by nearly

10% from their peak in

2022 a survey by the Chun Kong Graduate

School of Business also found that labor

cost growth last month was the weakest

since April

2020 deflation expectations are

spreading in the market leading to a

rebound in bonds which has pushed yields

to record lows and highlighted concerns

over Banks being overly exposed to

interest rate risks to stimulate the

market The People's Bank of China has

lowered the required Reserve ratio

multiple times and has proposed further

reductions its monetary policy

Department director Zan believes that

the effects of earlier reductions are

still showing with the average deposit

Reserve ratio at about 7% indicating

further room for cuts however American

Economist Dave Wong disagrees he

believes that with a reserve ratio

already at 7% and historically low at 8%

or above future reductions will be

limited Wong argues that this measure

will not resolve China's current

economic problems and considers the

official stance as merely a placebo as

China's economy continues to decline in

numerous businesses go bankrupt the

decreasing value of real estate often

used as primary collateral has resulted

in Surge of bad loans and non-performing

assets with deposit Reserve ratios

reaching low levels many banks are now

at risk not only of bankruptcy but also

of being unable to redeem deposits

highlighting systemic risks consequently

the central banks actions are viewed

more as psychological reassurance than

as meaningful solutions to the

underlying economic problems critics

argue that the Chinese Communist Party

stimulus measures have failed to address

the root cause of the economic downturn

the Govern government's focus on

investment has increased fiscal burdens

and worsened overcapacity meanwhile the

CCP has avoided confronting the deeper

issues such as authoritarian politics

stifling market growth widespread

corruption and the loss of public

confidence in the government observers

believe that the party's reluctance to

use its wealth to support the economy

and its disregard for long-term economic

health are key reasons why China's

economic Outlook continues to worsen

[Music]