Has the Chinese economy “hit the wall”? That question is raised and partially confirmed by Yiping Huang at East Asia Forum:
Has China’s economic miracle ended? The answer is probably yes, as no miracle lasts forever. Higher incomes and the higher labour costs they create, deteriorating external conditions and an ageing population all present serious long-term headwinds against high growth.
But China is neither the Soviet Union in the 1960s nor Japan in the 1990s. For China, sectors like technology platforms, electric vehicles, green energy and electronics are now vibrant sources of innovation and growth. A major financial crisis, like a blow-up of the property sector, is still unlikely. The economic impact of demographic shifts will be partially countered by artificial intelligence and the digital economy.
This article was written before the announcement that Chinese property developer Evergrande was on the brink of collapse and the subsequent bank runs.
I don’t know what is happening with the Chinese economy but I suspect that the levers that have been pulled over the last several decades by the Chinese authorities to boost the economy no longer have the force they used to.
