EL-ERIAN, KRUGMAN AND OTHER ECONOMISTS SPLIT ON OUTLOOK FOR CHINA'S STRUGGLING ECONOMY

Adding salt to the wound, January PMI numbers released by China's National Bureau of Statistics showed manufacturing activity contracted for the fourth month in a row, driven by slumping demand.

China is grappling with a series of economic challenges as its property market weakens, deflationary pressures spread, and its stock market experiences volatility. The CSI 300 index, a key indicator of the country's stock market performance, has plummeted by approximately 40% from its 2021 peaks, signaling significant turbulence in the financial sector.

Adding to the economic woes, data from China's National Bureau of Statistics revealed that manufacturing activity contracted for the fourth consecutive month in January. This decline, driven by a notable decrease in demand, has contributed to growing concerns about the health of the world's second-largest economy.

The accumulation of discouraging economic indicators has led to widespread skepticism among analysts and investors. Allianz, for example, has revised its optimistic outlook for China's economic growth, projecting a more modest average growth rate of 3.9% between 2025 and 2029, down from the pre-pandemic forecast of 5%.

Former International Monetary Fund official Eswar Prasad echoed these concerns, suggesting that the likelihood of China's GDP surpassing that of the United States is diminishing.

Such sentiments underscore the uncertainty surrounding China's economic trajectory and its ability to maintain its status as a global economic powerhouse.

Meanwhile, top economist and Allianz advisor Mohamed El-Erian highlighted China's dismal stock market performance against those in the U.S. and Europe in achart on X, saying it shows the stark divergence between all three equity markets.