China’s leadership is counting on an export boom to revive slumping growth, but those policies will not pull the world’s second-largest economy out of its doldrums, a top China watcher said.
Anne Stevenson-Yang is co-founder and editor of J Capital Research Wild Ride: A Short History of the Opening and Closing of the Chinese EconomyHe pointed out Beijing’s failures op-ed in the New York Times on Saturday.
„Years of erratic and irresponsible policies, excessive Communist Party control and undelivered promises of reform have created a stagnant Chinese economy with weak domestic consumer demand and sluggish growth,” he wrote. „The only way China’s leaders can see to pull themselves out of this hole is to pull back on exports.”
Stevenson-Yang predicts that the result will be more tension with China’s trading partners as cheap manufactured goods flood the markets, while the Chinese people become darker and the government more repressive.
The root cause of China’s economic problems is the Communist Party’s excessive control, which is not going away, while its strategies to focus on adding more industrial capacity are counterproductive, he said.
Most economists have suggested Chinese leaders loosen their grip on the private sector and encourage more consumption, which could lead to government reform — „that’s unacceptable,” he added.
The 1989 Tiananmen Square protests represented an opportunity for government liberalization in response to the growing private sector from economic reforms initiated a decade earlier. But Stevenson-Yang pointed out that it would weaken the power of the Communist Party.
„Instead, China’s leaders chose to fire at dissenters, further tighten party control, and engage in government investment to fuel the economy,” he said.
In the following decades, China’s investment-driven growth sought to appease the population, while its cheap exports kept prices low in the West. Meanwhile, debt piled up across China, and new infrastructure and housing remained unused.
Now, President Xi Jinping is running out of policy options, Stevenson-Yang warned, as Chinese consumers refuse to increase spending and China’s trading partners place more restrictions on its exports. In fact, the Biden administration is poised to impose heavy tariffs on a range of Chinese goods. He added that innovation will not come to the rescue as China’s economy is still largely dependent on replicating existing technologies.
„All this means that the era of 'reform and opening’ that transformed China and captivated the world since the late 1970s has ended with a whimper,” he concluded. „In an uncertain world, Ma Tsetung once said that the Chinese should 'dig deep mines, store grain everywhere, and not seek hegemony.’ That kind of siege mentality is coming back.
China’s sluggish growth, real estate crisis, high youth unemployment and US restrictions on key technologies It is called the lost decade stagnation. Pointing to China’s aging population, senior strategist Ed Yardeny last year said the country could become „the world’s largest nursing home.”
But a top China expert warned against such pessimism last month, saying it could lead the US to become complacent.
„Although its growth has slowed in recent years, China will expand at twice the rate of the United States in the coming years,” wrote Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics. Foreign Affairs
„Oddany rozwiązywacz problemów. Przyjazny hipsterom praktykant bekonu. Miłośnik kawy. Nieuleczalny introwertyk. Student.