The Chinese Economy Is in a Death Spiral

[Valin]

1945

Gordon Chang

May 20 2022

The Chinese Economy is in Trouble: “What we are going to see with China, for the first time that anyone can remember who’s alive, is an economy that’s twice the size of the U.S., possibly three times the size of the U.S., and it’s going to be very weird living in that world,” said Elon Musk on the “All-In with Chamath, Jason, Sacks & Friedberg” podcast.

At first glance, Musk looks correct. China is catching up to America fast. Last year, the Chinese economy skyrocketed 8.1%, producing $17.46 trillion in gross domestic product. The American economy clocked in at $23.00 trillion, growing only 5.7%.

Yes, Musk is America’s leading visionary, but this particular vision is off-target. The Chinese economy will never overtake America’s, at least not this century.

Elon Musk is making predictions by extrapolating. Extrapolation works most of the time, but not now.

Why not?

The Chinese economy – and the nation overall –  is passing a series of inflection points. The most fundamental one is demographic: The Chinese population is on track for a steep decline. The most immediate inflection point is economic: China is now contracting. The country needs growth to retire monumental debt, however.

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Repost, but Still relevant

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