Whither China? Part I – Regime impasse?

Whither China?

With the inflation (or should we say price shock) drama in the West largely played out, there is no story more important in the world economy right now than the question of China’s future.

The mood on China has shifted spectacularly in the last 18 months. Whereas once the prevailing impression was one of awe, now what prevails is a negative story. This is assembled out of data, official news from Beijing, quotations from off the record interviews with interlocutors in China and more or less commonplace assumptions about economic and political development. This may be bricolage. But it is the best we can do. There is not other way of forming a view. But in such moments it is a good idea to check our prejudices.

On the podcast, Cam and I took on the challenge of making sense of China’s current situation.

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Plus

Why China’s economy ran off the rails

OK, so I guess I’m writing about China one more time. For those subset of readers who are rolling their eyes and saying “Oh my God, ANOTHER China post?”, all I can say is, when there’s a big event that’s all over the news, people need a lot of explainers. And right now, the big event that’s in the news is China’s economic crisis.

This is a pretty momentous happening, since a lot of people had started to believe — implicitly or explicitly — that China’s economy would never suffer the sort of crash that periodically derails all other economies. That was always wrong, of course, and now the bears are coming out for a well-deserved victory lap. But there are a whole lot of narratives out there about why China’s economy crashed — it took on too much debt, it invested too much of its GDP, it increased state control at the expense of the private sector, and so on. So I think it’s useful for me to give my quick account of what happened. If you’d prefer a deep dive, this story from the Wall Street Journal is probably the best I’ve read, while the Economist has also done some excellent reporting on what the Chinese slowdown feels like on the ground.

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