From: lessgovt@gmail.com   
      
   China’s Stalling Economy Puts the World on Notice   
   By Peter S. Goodman, Aug. 11, 2023, NY Times   
   For over 25 years, China has been synonymous with relentless development and   
   upward mobility. As its 1.4 billion people gained an appetite for the wares of   
   the world — Hollywood movies, South Korean electronics, iron ore mined in   
   Australia — the    
   global economy was propelled by a seemingly inexhaustible engine.   
      
   Now that engine is sputtering, posing alarming risks for Chinese households   
   and economies around the planet. Long the centerpiece of a profit-enhancing   
   version of globalization, China has devolved into the ultimate wild card in a   
   moment of extraordinary    
   uncertainty for the world’s economy.   
      
   The risks have been amplified in recent weeks by a slew of developments.   
      
   First came word that China’s economy had slowed substantially in the spring,   
   extinguishing hopes of a robust expansion after the lifting of extreme Covid   
   restrictions.   
      
   This week brought data showing that China’s exports have declined for three   
   months in a row, while imports have dropped for five consecutive months —   
   another indicator of flagging prospects.   
      
   Then came news that prices have fallen on a range of goods, from food to   
   apartments, raising the specter that China could be on the brink of so-called   
   deflation, or sustained drops in prices, a harbinger of anemic commercial   
   activity.   
      
   And in a sign of deepening distress in China’s housing market — the   
   intersection of finance, construction and household wealth — a major real   
   estate developer, Country Garden, missed payments on its bonds and estimated   
   it lost up to $7.6 billion in    
   the first half of the year.   
      
   For Chinese workers and households, these events added up to trouble. Around   
   the globe, a weakening Chinese economy signaled a shrinking of demand for   
   major goods — from soybeans harvested in Brazil, to beef raised in the   
   United States, to luxury goods    
   made in Italy. It spelled less appetite for oil, minerals and other building   
   blocks of industry.   
      
   “The slowdown in China is definitely going to weigh on the global economic   
   outlook,” said Larry Hu, Hong Kong-based chief China economist for   
   Macquarie, the Australian financial services firm. “Because China is now the   
   No. 1 commodity consumer in    
   the world, the impact is going to be pretty, pretty big.”   
      
   Over the past decade, China has been the source of over 40% of global economic   
   growth, compared with 22% from the U.S. and 9% from the 20 countries that use   
   the euro currency, according to recent analysis from BCA Research.   
      
   Adding to the worry is the widespread sense that the Chinese authorities are   
   limited in their options to reinvigorate the economy, given mounting debts now   
   estimated at 282% of national output — more than that of the U.S.   
      
   The govt has outlined spending programs aimed at spurring consumers to spend   
   and businesses to invest. But the details have been opaque, while leaving the   
   impression that local govts will be stuck with the bill. Local govts are at   
   the center of concerns    
   about the debt crisis. They had borrowed aggressively for years to finance the   
   construction of roads, bridges and industrial parks.   
      
   All of this is playing out as China’s ruling Communist Party tries to   
   transition from an economy powered by state-directed investments in   
   infrastructure and exports to one led by domestic consumer spending.   
      
   The old model has run its course. It worked remarkably well for the two   
   decades spanning the millennium, when the govt financed ports, electrical   
   grids and other basic works for an export-led factory boom.   
      
   At the same time, private entrepreneurs started some of the world’s more   
   innovative and valuable technology companies. In more recent years, many have   
   been constrained by a regulatory crackdown overseen by President Xi Jinping.   
      
   In the rest of the world — and especially in the U.S. — China’s   
   staggering export growth, combined with the loss of domestic factory jobs, has   
   set off conflicts over trade.   
      
   The Trump administration imposed across-the-board tariffs on Chinese imports.   
   The Biden administration has continued that policy, adding prohibitions on   
   investment in key Chinese sectors such as advanced computer chips. President   
   Biden intensified that    
   campaign in signing an executive order on Wednesday barring investment in   
   industries that can bolster China’s military.   
      
   On Thursday, Biden referred to China’s economic vulnerabilities as “a   
   ticking time bomb,” adding: “When bad folks have problems, they do bad   
   things.”   
      
   Xi has previously accused the United States of running a campaign aimed at   
   suppressing China’s development.   
      
   Faced with hostilities between Washington and Beijing, and chastened during   
   the pandemic by the difficulties moving products from Chinese factories to   
   retailers in North America and Europe, multinational companies have shifted   
   factory orders to countries    
   like Vietnam, India and Mexico.   
      
   For Chinese policymakers, the alterations to the geography of international   
   commerce have added urgency to the transition toward an economy centered on   
   domestic spending power.   
      
   Still, those designs were halted by the pandemic. The govt imposed draconian   
   restrictions on business and freedom of movement, locking down whole cities.   
      
   The lifting of those controls in December, after an extraordinary series of   
   public protests, was widely anticipated as a catalyst for consumer spending.   
   But consumer spending has been weak — so weak that China’s National Bureau   
   of Statistics recently    
   halted the release of data that drew attention to the economy’s problems.   
      
   Chinese households have long been some of the most prodigious savers on earth,   
   owing to the fact that social safety nets are meager. Over the first half of   
   this year, total household deposits in the Chinese banking system grew by some   
   12 trillion Chinese    
   yuan (about $1.7 trillion), the largest expansion in a decade.   
      
   But the increase in savings, as well as the weakness of investment and   
   consumer spending, appears to reflect a general erosion of public faith.   
   During the pandemic, policy lurched from total lockdown to no controls —   
   what the economist Adam Posen    
   recently called “economic long Covid.”   
      
      
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