Fifty years ago, some radical leftist groups were famous for constantly predicting the imminent collapse of Western capitalism. But as we now see, capitalism survived these cataclysmic precursors. Over the past decade, mainstream commentators have made similar claims about China’s party-state economic system. But so far, China has also survived.
Talk of China on the brink of financial and economic ruin was once an unusual perspective.For example, Gordon Chan’s The coming collapse of Chinawas published in 2001 and predicted that China would collapse by 2011. At the end of 2011, Zhang said: was recognized by foreign policy magazine Although his prediction was wrong, he said it was off by “just one year” and that China’s collapse would definitely occur in 2012. As a result, Chan was named to the magazine’s annual list of “10 Worst Predictions of the Year.” 2 times in a row.
Throughout the 2010s, this trickle of foreboding turned into a flood. George Magnus, a prominent Oxford-based economist, has consistently advocated the destruction of China. He kicked off his decade with his 2010 book. Uprising: Will emerging markets shape or shake up the global economy?. 1 reviewer explained It says it is “a useful corrective to some of the more stifling and over-enthusiastic parts of China’s inevitable path to world domination.” Then in 2018 he was released by Magnus. Red flags: Why Xi’s China is in dangerThe paper is said to provide “an incisive account of the threats to China’s continued economic rise.”
China’s uneven recovery after COVID-19 darkness of the west On the outlook for China’s economy to reach new heights this year. Here are some of the many pessimistic headlines of late. “China faces a ‘downward spiral’ as real estate crisis worsens” ( telegraph); “China’s economic downturn signals the end of the era of high growth” ( City AM); and “China’s unprecedented economic crisis worries the rest of the world” ( Le Monde).
These stories are based on real economic issues.China has slipped in price deflation July due to growth in retail sales and industrial production it’s late. And just this week, leading real estate developer Country Garden Co. missed payment Part of the debt. To put an end to this situation, the Chinese government announced last month that it would suspend publication. youth unemployment rateafter reporting record highs, a sign that authorities are trying to bury bad economic news.
So could the dire predictions of Western economists finally come true this time? Indeed, economic growth has slowed significantly compared to those heady years of the 1990s and 2000s, when the country recorded annual growth rates of more than 10 percent. But since China has weathered all previous signs of doom, it would be wise not to hold our breath.
The current economic slowdown is to some extent inevitable. An expanding economy cannot sustain such high compound growth rates forever, at least without some kind of recession. Still, China’s current economic problems need to be seen in a broader context.
It becomes clear when we look at what Western experts predicted about China’s growth 20 years ago. Dreaming with BRICs: The road to 2050was a very famous analytical work published in 2003 and produced by Goldman Sachs. This challenged the then-widely held complacent view that Western economies would forever dominate the world. The study suggests that China could soon become an economy larger than Germany or Japan, and could overtake the United States as the world’s largest economy by around 2040. The Goldman Sachs report acknowledged that these predictions were “startling” and “dramatic.” But what is most surprising from today’s perspective is that China’s actual growth rate has exceeded those optimistic projections. Additionally, Goldman Sachs predicted that China’s annual growth rate will slow to 4.6% from 2020 to 2025 and 4.1% from 2025 to 2030. These forecasts are broadly in line with the Chinese government’s forecasts. international monetary fund (IMF) July this year. Indeed, although the IMF has warned of China’s loss of momentum, it still expects China’s output to grow by 5.2% this year and 4.5% next year.
Are these numbers really worthy of talk of a “recession,” a “downward spiral,” or an “unprecedented crisis”? On the contrary, these are levels of growth that governments in developed countries no longer even desire.of Developed country It is expected to grow by 1.5% this year, but fall to 1.4% next year.
China’s long-term slowdown is now further reinforced by some real additional challenges. First, Beijing’s harsh three-year coronavirus lockdown has been an economic and social disaster. China’s recovery from its zero-corona policy will be smooth and steady, given that Western economies have struggled to recover from their own lockdowns, which were far less brutal and abandoned far earlier. The thought of being deaf has always been fanciful.
Meanwhile, geopolitical tensions, especially with the United States, are also constraining China’s economy.especially the usa Export and investment ban Technological innovations in the three cutting-edge technology fields of semiconductors, AI, and quantum computing are bound to have a negative impact on China’s economic development, at least in the short term. Supply chain “reshoring”, or more precisely Western efforts to diversify overseas production capacity to friendly foreign countries, could also slow China’s growth. The inflow of foreign investment is also expected to decline.
It is also true that China’s real estate sector is in deep trouble. We are in too much debt and there is no doubt that more defaults and bankruptcies will occur.Only One Company – Notorious evergrande – Has debts worth £290bn. These problems also exacerbate the financial vulnerability of local governments, as many rely on land sales to developers to sustain operations. This means that the contribution to growth from real estate development and local government investment is unlikely to reach the levels seen in the 2010s.
As a result of all this, China is very likely to experience a financial crisis or recession at some point in the next few years. Accumulating instability is an inevitable consequence of growth under capitalism, even in an authoritarian party-state system (although the Chinese government is undoubtedly They will do their best to cover up a lot).
But these setbacks alone do not justify the current level of selling the West’s doom. None of these will lead to a “systemic crisis” or the end of China’s development.
Yes, China is definitely facing difficult times economically. But advantageously, it is much more resilient than many other mature developed countries. People are right to question how resilient Western economies will be when the next shock occurs. Few, if any, mature countries can rely on the same stockpiles as China.
China’s resilience to disruption is an order of magnitude different from that of Western countries, largely due to the strength of its production base. Despite talk of reshoring and deglobalization by Western countries, China remains undoubtedly the world’s number one. The world’s manufacturing powerhouse, accounting for almost 29 percent of global manufacturing output. We produce approximately the same amount as the next three largest manufacturing countries, the United States, Japan, and Germany combined.
Nor does China simply produce low-quality, low-tech products.Currently lead the world In the production of electric vehicles, electric vehicle batteries, 5G communication equipment, commercial drones, Internet of Things devices, mobile payments, and solar cells. It also tells us that China is on top of the world, given the West’s obsession with net zero. largest and fastest growing producer We have been implementing renewable energy for over 10 years.
While it’s true that China’s debt has increased significantly over the past decade, it also points to the relative resilience of its economy. Developed countries such as the United States and the United Kingdom are in debt because they have subsidized consumption through bailouts, fiscal stimulus, and monetary easing policies. Although this has helped maintain existing levels of economic activity, it has left little legacy. For the future. In contrast, most of China’s debt comes from investment funds. While rising debt has destroyed Western infrastructure, China’s debt has largely financed new and modern assets, from homes and roads to bridges, airports and ports to high-speed rail.
China is often criticized for making “unproductive” investments. Indeed, many new houses, apartments, Even the city It may be empty or underutilized today. But they at least provide a solid physical foundation for future growth. As in Western countries, it is far better to have too much housing and modern transportation services than too little.
Moreover, it is surprising that a demoralized IMF still expects China to maintain its role as the largest contributor to global growth.This year, China will occupy One-third of global economic growth, a similar proportion to the 2010s. In fact, the economic recovery of Western countries after the 2008 financial crisis was largely due to the crisis measures taken in Beijing. The Chinese government launched a massive stimulus package to support its economy, which in turn helped prop up the rest of the world. Without China’s growth, the West would have experienced an even tougher economic decade. And despite China’s slowdown, the IMF still expects China to contribute nearly a quarter of the global economy in the five years to 2028. Twice the amount from the US.
Given all the indicators of the continued durability of China’s economy, why are so many Western commentators so pessimistic? It is very difficult to know exactly what is going on in China because access to information is so often controlled and hidden. This alone should make us at least a little skeptical. What so many Western commentators are convinced of People predicting the collapse of the Chinese economy.
perhaps schadenfreude It has something to do with a gloomy premonition. Some commentators may be reveling in their opponents’ apparent misfortune. In fact, Western elites view China in two ways: as a dangerous strategic rival and as an economic basket case. Despite the elements of contradiction here, is China strong or weak? – Both coincide with an intensification of China-bashing over the past decade.
More broadly, the negative view of China’s economy coincides with deepening pessimism in Western economic thought. Post-pandemic, amid energy shortages and the war in Ukraine, we seem more mired in economic and political quagmire than ever before. There appears to be little prospect for Western governments to regain control of development and return their economies to a path of sustained growth.
Western countries often feel as if they are teetering from one crisis to the next without any challenges being resolved. In fact, a “permanent crisis” (meaning a long period of seemingly endless hardship, confusion, and uncertainty) was chosen. Last year’s Collins Dictionary word of the year. It may therefore be no surprise that mainstream commentators predict a major crisis in China as well.
When the radical left predicted the end of capitalism 50 years ago, this was one way to replace the loss of its influence. Having lost confidence that he could win the support of the workers, it was comforting to imagine that the class enemy would soon collapse on its own. Similarly, Western elites who have lost their sense of purpose and self-confidence may take some solace from the impending collapse of their greatest geopolitical adversary. At the time, estimates of capitalism’s imminent demise said less about the state of capitalism than about the plight of the radical left. Similarly, today’s doomsaying about China says more about the confusion, inertia, and helplessness of Western elites than what is actually happening in China.
phil mullan‘s Beyond Conflict: Globalists, Nationalists, and Their Discontents Published by Emerald Publishing.Please order from emerald or Amazon (UK).