Wednesday, November 24, 2021

Is China's Economy in Trouble?

Noah Smith looks at China's economy and how its "catch-up growth" may be over.

...Covid is distorting the numbers and because China's government will probably smooth out a few bad years of data as it has in the past. But there are signs that a perfect storm is brewing that could lead to permanent deceleration. And depending on the size of that slowdown, it could mean that China's economic miracle has basically run its course.

Smith details four "simultaneous economic problems" but I would suggest he add a fifth - decoupling. Many of the developed nations pre-pandemic and pre Xi crackdown who were doing business with China are moving their businesses elsewhere. The political climate, the PR hit at home, and the fact that labor is cheaper in places like Vietnam, Mexico, and South America make China no longer worth the hassle. The people of the world don't trust China because China has been an "asshole."

Also economic growth requires innovation and innovation requires freedom. Xi Jinping has very publicly crushed freedom of all sorts in China and has probably strangled the economy in the process. 

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