China’s economy has gone flat, and every effort the Communist government has made to pump it up has either failed or barely moved the needle.
The Chinese go-go economy of the early years of this century has taken a tumble. The 8% growth from 2010-20 is about half that today at 4.75%. The pandemic was part of the problem. China kept opening and closing sectors of its economy in different regions, which brought the economy to its knees. By the time it gave up on the “zero-COVID” model, investment and consumer spending had tanked, and housing was in free fall.
China initiated a massive stimulus effort starting in March looking to jumpstart the economy. But the effect has been uneven and in some ways hardly made a ripple.
Desmond Lachman, a senior fellow at AEI, believes that China is on the precipice.
“Unless the Chinese government introduces major structural economic reforms that encourage domestic consumer spending, China could experience a Japanese-style lost economic decade. That could have major consequences for the world economic outlook,” he said.