Here’s the TL;DR version of Noah Smith’s excellent and chart-filled post on the economy of China:
So anyway, this is my simple story for why China’s economy slowed down so early in its development and then experienced a crash in the early 2020s. Export-led and FDI-led growth can’t go on forever, and when they run out, it’s better to divert capital toward building a well-balanced economy of high-tech manufacturing and services than to shower it on property developers and shadow banks. Pivoting to real estate will come back to bite an economy eventually. For all the talk of China’s “100-year plans†and whatnot, they fell into a pothole that was right in front of their feet.
The real story is going to be more complicated than that, but if you want a quick-and-dirty explanation of why China’s crash is on everyone’s minds right now, I think the story of the pivot to real estate is probably the best simple story you can tell.
I’m not 100% convinced by that although he does make some good observations about demographic change and having picked the low-hanging fruit. I can’t help but think that the CCP had decided that basing its economy more on consumer spending threatened its hold on the country.
“Export-led and FDI-led growth can’t go on forever,”
Evidently Smith hasn’t heard of Germany or Russia.
David Goldman at Asia Times disputes the claim that China is collapsing. He does point out that the CPC is trying to force investment out of real estate and into high technology.
Also, the slow down in Chinese exports has hit all the export driven economies in the East: China, Japan, South Korea, Vietnam… This is due to the collapse of demand from the import countries. US sanctions on Russia have shut down much of Europe’s economy, driving the EU into recession. The US is likely in recession, too.
I seem to recall something about motes and beams and eyes.
Since the proletarians are supposed to be the new ruling class, the Bourgeoisie need to be suppressed lest their exploitation of the proles leads to social unrest.
And I think that Communist Party philosophy is the only way you can explain economics in that country.
I’ve said before, do we, (the west), have a superior system to recommend, promote, or do our continuing military interventions prove that we do not?