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China’s economy is headed for a ‘dead-end,’ scholar says


A senior China observer said that the Chinese leadership depends on increasing exports to revive declining growth, but these policies will not lift the second largest economy in the world from the distress it is suffering from.

Anne Stevenson Yang, co-founder of J Capital Research and author of Road Trip: A Short History of the Opening and Closing of the Chinese EconomyHe pointed to Beijing’s failures An editorial in the New York Times on saturday.

“Years of mistaken and irresponsible policies, excessive Communist Party control, and broken promises of reform have created a blocked Chinese economy characterized by weak domestic consumer demand and slow growth,” she wrote. “The only way China’s leaders can see to dig themselves out of this hole is to resort to pumping exports.”

The result will be more tension with China’s trading partners Cheap manufactured goods continue to flood the marketsStevenson Yang predicted that the Chinese people would become more depressed, making the government more repressive.

She said the root cause of China’s economic problems is the Communist Party’s excessive control, which will not go away, while its strategies focused on adding more industrial capacity are counterproductive.

She added that most economists recommended Chinese leaders loosen their grip on the private sector and encourage more consumption, which would necessitate government reform – “which is unacceptable.”

The 1989 Tiananmen Square protests represented an opportunity to liberalize the government in response to the growing private sector that emerged from economic reforms begun a decade earlier. Stevenson Yang noted that this would have weakened the power of the Communist Party.

“Instead, China’s leaders chose to shoot protesters, further tighten party control, and rely on government investments to fuel the economy,” she said.

In the decades that followed, China’s investment-led growth sought to pacify the population, while its cheap exports kept prices low in the West. At the same time, debt piled up across China, and new infrastructure and housing were underutilized.

Stevenson Yang warned that President Xi Jinping is now running out of policy options, as Chinese consumers refuse to increase spending and China’s trading partners place more barriers to its exports. In fact, the Biden administration is preparing to impose tough sanctions Customs duties on a range of Chinese goods. She added that innovation will not come to the rescue either, as the Chinese economy still relies mostly on replicating existing technologies.

She concluded by saying: “All this means that the era of ‘reform and opening-up’, which has transformed China and captivated the world since its beginning in the late 1970s, has ended with a whimper.” Mao Zedong once said that in a world of uncertainty, the Chinese should dig deep tunnels, store grain everywhere, and never seek to impose hegemony. This kind of siege mentality is coming back again.”

Slowing growth in China, a real estate crisis, high youth unemployment, and US restrictions on key technologies have led to expectations of a new revolution. The so-called lost decade From stagnation. Pointing to China’s aging population, veteran strategist Ed Yardeni said last year that the country could become “The largest nursing home in the world“.

But a senior China expert last month warned against such pessimism, saying: This may lead to US complacency.

“Although its growth has slowed in recent years, China is likely to expand at twice the rate of the United States in the coming years,” Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics, wrote in an article. Foreign affairs

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