Communist Party Priorities Complicate Plans to Revive China’s Economy
China's economic policy is being driven by ideology, with leaders hesitant to provide stimulus to the economy out of fear of "welfarism," according to Western experts.
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Posted 8/27/2023, 3:00:00 AM
wsj.com
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China's economy, which has been a model of growth for the past 40 years, is facing deep distress and its long era of rapid economic expansion may be coming to an end, marked by slow growth, unfavorable demographics, and a growing divide with the US and its allies, according to the Wall Street Journal.
China's weak economy, including an unstable property market and weak consumer demand, is posing risks to global markets and economies like the US, according to experts.
China's economic model, driven by industrialization and exports, is showing weaknesses with an imbalanced economy, low demand, slumping trade, and a struggling property sector, highlighting the need for structural reforms to boost domestic consumption and confidence.
China's economic difficulties can be attributed to its reliance on authoritarianism and central planning, which has led to wasted capital, labor, and diverted efforts, creating significant problems and holding back the economy. The Biden administration's adoption of industrial policies and top-down planning in its economic scheme, known as "Bidenomics," bears similarities to China's flawed approach.
China's economic slowdown is causing alarm worldwide, with countries experiencing a slump in trade, falling commodity prices, and a decrease in Chinese demand for goods and services, while global investors are pulling billions of dollars from China's stock markets and cutting their targets for Chinese equities.
China's economy is experiencing a structural slowdown and becoming increasingly opaque, making it difficult for outsiders to understand the true state of the country's economic affairs, as President Xi Jinping prioritizes ideology over economic growth and transparency.
China's economy is facing significant challenges, including a property crisis, youth unemployment, and a flawed economic model, but the government's limited response suggests they are playing the long game and prioritizing ideology over effective governance.
US companies are becoming increasingly hesitant to invest in China due to concerns over new anti-spying laws, competition from state-funded firms, and the country's economic challenges such as deflation and a property crisis.
China's recent stimulus measures to boost its economy, including reducing down payments for homebuyers and lower rates on mortgages, are impressing the markets and may dictate the direction of the commodity market.
China's economy is portrayed as irrecoverably declining in the eyes of Western mainstream media.
China's failure to restructure its economy according to President Xi Jinping's bold reform plans has raised concerns about the country's future, with the possibility of a financial or economic crisis looming and a slow drift towards stagnation being the most likely outcome. The three potential paths for China include a swift, painful crisis; a gradual winding down of excesses at the expense of growth; or a switch to a consumer-led model with structural reforms that bring short-term pain but lead to a faster and stronger emergence.
China's economic slowdown is posing a significant challenge to President Xi Jinping's agenda, forcing him to make difficult choices and potentially relinquish some control over the economy. The slump in housing sales and the crackdown on private capital are among the factors contributing to the economic setbacks, prompting calls for change and a reevaluation of economic policies under Xi's highly centralized leadership. However, Xi seems reluctant to make major changes to his strategy, opting for a hands-off approach and avoiding a big rescue plan for distressed developers and local governments. The central government's control over taxes and the need to revamp the fiscal system further complicate the situation. Restoring government finances while reassuring private investors is a daunting task that requires strong leadership and potentially contentious policy changes. The upcoming Communist Party meetings will shed light on how Xi plans to restore confidence in his economic agenda, but some economists and former officials warn that time may be running out for China to embrace necessary reforms.
China recognizes its economic problems and wants to improve communication and attract foreign investment, showing a shift from its usual anti-Washington rhetoric.
China's economy has consistently outperformed other major economies in the past four years, but the US is spreading false narratives and propaganda to hide this reality, according to John Ross, former director of economic and business policy for the mayor of London. The US has two motives: discouraging foreign investment in China and influencing China's political and economic policies.
China's economy is expected to grow less than previously anticipated due to struggles in the property market, leading economists to predict further downgrades and posing risks to both the domestic and global economy.
China's government has been less transparent and tolerant of bad economic news, leading to concerns about the country's economic stability and potential risks for investors.