Noah Smith with a very thoughtful analysis on how China came to be the manufacturing hub of the world and how that world is today unravelling. Thought the article was very well done. There were some things I'd disagree with (like how Noah describes China's handling of COVID - in my mind their Zero Covid policy is a disaster for China) but overall very well done.
Two details from the article caught my eye:
- China has stopped publishing most of its economic statistics. If the numbers were good - do you think China would be hiding them?
- China's stocks are now trading below the value of their assets on paper. And with foreign investment fleeing - my guess is those stocks stay underwater.
I've never liked the term "Chimerica" because I've long thought the Chinese economy was more of a chimera (a mythical beast made up of different parts). Nothing in the article changed my opinion on that.
Two areas of potential trouble that weren't discussed in the article, IMHO, are the facts that China is neither energy nor food independent. The first can be solved by treating Russia as China's gas station (this opens up a number of other geopolitical issues) but the second will be harder to solve and could be something that becomes more and more of an issue for Xi Jinping's government. A hungry people used to having food will become less compliant and internal dissention against Xi's Marxist turn may not go over so well.
Anyway - the article is well worth you time.
No comments:
Post a Comment