In spite of its ridiculous or tortured false equivalences on U.S. politics, I continue to support the NY Times. Two reasons: 1.) Paul Krugman’s economic columns (here’s a gift link to his latest on food prices) and 2.) the Times’ ability to support long-form investigative and in-depth foreign affairs stories. Today it’s the latter: the Times has a collection of stories on China’s economy. Here are gift links to excellent stories on the threat of price deflation and on the possible default of another huge Chinese real estate developer. Another related article discusses Biden’s new effort to restrict certain technology transfers to China for national security reasons. A fourth discusses new challenges facing Western companies doing business in China.
China’s economic troubles are likely not exaggerated. Youth unemployment exceeds 20%. Housing values — a key asset for many Chinese people — are starting to fall, which will reduce Chinese consumers’ confidence. China public debt is increasing and private debt is high; those debts will be harder to service if prices continue to fall. That said, China has a vast economy and sufficient resources to mitigate the damage to some extent. Probably. Here’s the key thing: China needs to decide whether to continue its drift toward aggressive authoritarian states, such as it’s “no-limits partnership” with Russia, or to begin to reverse course, more clearly denounce Putin’s military expansionism in Ukraine and dial down on its own military threats against Taiwan. China could thereby help firm up or re-establish mutually beneficial relations with the Western economies. Hopefully, both the Chinese people and their authoritarian leadership will begin to see that rebuilding trust and cooperation with the West is better for the Chinese economy and a strong, confident Chinese future than dalliances with genocidal dictators like Putin and bullying their neighbors in East Asia. China reversed course on its draconian anti-Covid policies, it can also reverse course on economics. At least that’s my hope. I’m an optimist.