This was meant to be the year of the great Chinese rebound. Unshackled by the world's most draconian Covid restrictions, economists expected the Chinese economic tiger to roar back to life in 2023. Instead, it has looked decidedly meek.

Data released last week showed China's economy lost further steam in June, as manufacturing activity contracted again and other sectors failed to build momentum.

China's economy is afflicted by a confluence of five problems.

Property sector

First, the property sector is crashing. After the government cracked down on over-indebted developers in 2020, house prices across the vast country started falling. In some cities, such as Zhengzhou in the northeast, they have tanked by up to 80%. Many developers have stopped building houses that had been sold but not delivered, prompting home buyers to cease mortgage payments.

According to Bloomberg data, banks advanced the smallest amount of longer-term loans to households last year in almost a decade, and borrowing was down another 13% in the first five months of this year, indicating fewer people are taking out new mortgages.

Worryingly, with very few new buyers coming into the market, this downward spiral could have much further to run.

Youth unemployment

Second, is youth unemployment. At 20.8%, the jobless rate for those aged 16 to 24 is the highest since China began publishing the data in 2018, and is four times the national urban rate. Key drivers are the slump in services...