On the Road to a Lost Chinese Economic Decade
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The Chinese property and credit market bubble has burst, and the country is on its way to a Japanese-style lost economic decade. Chinese policymakers believe their country's economy can continue to grow at five percent a year, but this is an illusion. President Xi's efforts to centralize economic power and suppress economic debate will delay much-needed reforms and increase the chances of China exporting deflation. The Chinese government allowed dangerous economic imbalances to occur, with savings and investment reaching unsustainably high levels of around 42 percent of the size of the economy. China allowed a property and credit market bubble to form, with the Chinese property market accounting for close to 30 percent of the economy. President Xi's zero-Covid policy and regulatory clampdown on the high-tech sector have added to the country's economic woes. Major Chinese property developers have defaulted on their debts, house prices are falling, and strains are appearing in the shadow banking system. The specter of deflation is haunting the Chinese economy, making it difficult to grow out of its debt mountain. China appears to be on the road to a lost economic decade, which will have major implications for the world economy. The Federal Reserve should be more forward-looking in its policy setting to avoid a hard US economic landing.
#ChineseEconomy #EconomicImbalances #PropertyMarketBubble #CreditMarketBubble #EconomicOutlook #Inflation #Deflation #FederalReserve
https://www.aei.org/economics/on-the-road-to-a-lost-chinese-economic-decade/
American Enterprise Institute /
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2024-03-14 15:52:44
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2024-03-14 15:52:44Event JSON
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"content": "On the Road to a Lost Chinese Economic Decade\n==========\n\nThe Chinese property and credit market bubble has burst, and the country is on its way to a Japanese-style lost economic decade. Chinese policymakers believe their country's economy can continue to grow at five percent a year, but this is an illusion. President Xi's efforts to centralize economic power and suppress economic debate will delay much-needed reforms and increase the chances of China exporting deflation. The Chinese government allowed dangerous economic imbalances to occur, with savings and investment reaching unsustainably high levels of around 42 percent of the size of the economy. China allowed a property and credit market bubble to form, with the Chinese property market accounting for close to 30 percent of the economy. President Xi's zero-Covid policy and regulatory clampdown on the high-tech sector have added to the country's economic woes. Major Chinese property developers have defaulted on their debts, house prices are falling, and strains are appearing in the shadow banking system. The specter of deflation is haunting the Chinese economy, making it difficult to grow out of its debt mountain. China appears to be on the road to a lost economic decade, which will have major implications for the world economy. The Federal Reserve should be more forward-looking in its policy setting to avoid a hard US economic landing.\n\n#ChineseEconomy #EconomicImbalances #PropertyMarketBubble #CreditMarketBubble #EconomicOutlook #Inflation #Deflation #FederalReserve\n\nhttps://www.aei.org/economics/on-the-road-to-a-lost-chinese-economic-decade/",
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