China’s leaders are relying on a surge in exports to revive sluggish growth, but such measures will not lift the world’s second-largest economy out of the doldrums it finds itself in, a top China watcher said. .
Anne Stevenson Yang, co-founder of J Capital Research, A wild ride: A short history of the beginning and end of China’s economypointed out the Chinese government’s failings in an op-ed in Saturday’s New York Times.
“Years of erratic and irresponsible policies, Communist Party overreach, and unfulfilled reform promises have created China’s economy in a dead end of weak domestic consumer demand and slowing growth,” she wrote. “The only way for Chinese leaders to get out of this hole is to retreat to expanding exports.”
As a result, Stevenson-Yang predicts that as cheap manufactured goods continue to flood the market, tensions with China’s trading partners will further rise, the Chinese public will become more depressed, and the government will become more repressive. did.
He said the root cause of China’s economic problems was the Communist Party’s overregulation, which has not been eliminated, while the Communist Party’s strategy focused on expanding industrial capacity was counterproductive.
Most economists recommend that China’s leaders loosen their grip on the private sector and encourage more consumption, which would require government reforms, which they say are “unacceptable.” she added.
The Tiananmen Square protests of 1989 were an opportunity for the government to liberalize in response to the growth of the private sector resulting from economic reforms begun a decade earlier. But that would weaken the party’s power, Stevenson-Yang said.
“Instead, China’s leaders have chosen to shoot protesters, further tighten control of the party, and indulge in government investments to stimulate the economy,” she said.
In the decades that followed, cheap exports kept Western prices low while China sought to placate its people with investment-driven growth. Meanwhile, debt was piling up across China, and new infrastructure and housing was being left underutilized.
Now, with Chinese consumers refusing to spend more and China’s trading partners raising barriers to exports, President Xi Jinping is running out of policy options, Stevenson Yang warned. In fact, the Biden administration is poised to impose harsh tariffs on a variety of Chinese products. Innovation will not come to the rescue either, as China’s economy still relies mainly on replicating existing technologies, he added.
“All this means that the era of ‘reform and opening up’ that transformed China and captivated the world since it began in the late 1970s has ended with a whimper,” she concluded. “Mao Zedong once said that in a world of uncertainty, the Chinese should ‘dig deep tunnels, store grain everywhere, and never seek supremacy.'” That siege mentality is coming back. . ”
China’s slowing growth, real estate crisis, high youth unemployment, and U.S. restrictions on key technologies are predicting a so-called “lost decade” of stagnation. Veteran strategist Ed Yardeni last year pointed to China’s aging population and said the country could become “the world’s largest nursing home.”
But a top Chinese expert warned last month that such pessimism could make the United States grow complacent.
“China’s growth has slowed in recent years, but it is likely to expand twice as fast as the United States in the coming years,” said Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics. foreign affairs
