The End of China’s Economic Miracle
Foreign AffairsAug 02, 2023
On Wednesday, China's National Bureau of Statistics (NBS) announced that consumer prices fell in July for the first time in more than two years, highlighting a trend of deflation that affects household wealth and makes loan repayments more difficult.
The NBS report shows that inflation fell 0.3% in July and comes a day after July figures showed that imports and exports fell sharply during the month. Manufacturers and retailers are now forced to cut prices to deal with a glut of supply and sluggish sales, as producer price inflation fell by 5.4%.
China's powerhouse economy could finally be faltering, as its economic strength may be weaker than previously portrayed. After hedging their bets on a post-COVID boom that never materialized, Beijing will strain under a mountain of debt, lower demand, and a property crisis. The government has started to muzzle economists who don't toe the party line of economic success, as China attempts to maintain their façade of unmitigated growth.
China continues on a trajectory of growth, as demand for services continue to rise as pandemic recovery continues apace, even amid a faltering demand for goods. The 20-point plan unveiled by the government to shore up consumer demand is a testament to China's sober-minded thinking on the economy, as economic growth continues unabated. Reports of China's economic demise are, once again, greatly exaggerated.
China's GDP will be $17.06T in 2023, according to the Metaculus prediction community.