Beyond unfavorable demographics, China is grappling with issues like large debts, misallocation of capital, severe pollution, and a troubled property sector. But China’s government has been well aware of these problems – and committed to addressing them – for a decade.
SHANGHAI – The narrative that China’s economy is nearing its peak – or has already reached it – has taken hold in Western media. But if you read the doomsayers’ analyses carefully, you will find that many of the reasons they give for their bleak assessments are not new. On the contrary, they tend to highlight precisely the same challenges that economists and commentators have been harping on for at least a decade or longer. If China was not sputtering then, why should we believe it is now?
To be sure, the global context has changed. Perhaps most important, the prevailing narrative about China has turned largely negative, and the West is now far more hostile toward it than it was ten or even five years ago. With the United States working harder than ever to contain China, direct Chinese exports to the US have fallen.
Even so, the “decoupling” of the world’s two largest economies is probably overstated. A recent study by University of California San Diego economist Caroline Freund and her colleagues shows that the US and China are indeed reducing their engagement in some areas. For example, US import growth from China lagged well behind US import growth from other countries for products subject to US tariffs.
SHANGHAI – The narrative that China’s economy is nearing its peak – or has already reached it – has taken hold in Western media. But if you read the doomsayers’ analyses carefully, you will find that many of the reasons they give for their bleak assessments are not new. On the contrary, they tend to highlight precisely the same challenges that economists and commentators have been harping on for at least a decade or longer. If China was not sputtering then, why should we believe it is now?
To be sure, the global context has changed. Perhaps most important, the prevailing narrative about China has turned largely negative, and the West is now far more hostile toward it than it was ten or even five years ago. With the United States working harder than ever to contain China, direct Chinese exports to the US have fallen.
Even so, the “decoupling” of the world’s two largest economies is probably overstated. A recent study by University of California San Diego economist Caroline Freund and her colleagues shows that the US and China are indeed reducing their engagement in some areas. For example, US import growth from China lagged well behind US import growth from other countries for products subject to US tariffs.