The US and China remain on a collision course. The new cold war between them may eventually turn hot over the issue of Taiwan. The “Thucydides trap” – in which a rising power seems destined to clash with an incumbent hegemon – looms ominously. But a serious escalation of Sino-American tensions, let alone a war, can still be avoided, sparing the world the cataclysmic consequences that would inevitably follow. There will always be at least some tensions when a rising power challenges the prevailing global power. But China is facing…
Tag: Economics
A US growth-inflation ‘soft landing’ is vital to solving the global economy puzzle | Mohamed El-Erian
The global economy this year is full of puzzling surprises. Japan’s GDP growth is currently surpassing that of China, and July retail sales in the US were double the consensus forecast, despite the US Federal Reserve pursuing one of the most concentrated rate-hiking cycles in decades. In the UK, wage growth has risen to an annualised rate of 7.8% and core inflation has remained high, even after 14 consecutive rate increases by the Bank of England (with more to come). Meanwhile, Brazil and Chile have cut interest rates, diverging from…
China’s economic model is faltering – does it have the political will to fix it? | George Magnus
The long days of summer are proving to be rather too long for the government in Beijing. In an attempt to stabilise the faltering real estate market, the authorities announced earlier this week a modest decline in interest rates that was underwhelming in scale and intent. Those who recall the bad old days in which the west was buffeted by successive crises such as those involving Northern Rock, Bear Stearns and Lehman Brothers will recognise the futility of lower interest rates in stemming systemic problems in real estate and finance…
The Guardian view on the Chinese economy: it looks bad. What we can’t see may be worse | Editorial
A spate of recent statistics shows that the Chinese economy is faring poorly. The country was supposed to rebound after ditching its draconian “zero Covid” policies, but, after an initial revival, things have gone awry. Earlier this month it slipped into deflation. Key indicators, including industrial production, investment and retail sales, came in well below expectations. The most concerning figure, however, is the one that we can’t see. The youth unemployment rate was suspended from the monthly economic data release, having reached a record 21.3% in June – suggesting not…
Chinese economic slowdown is a result of debt supercycle | Kenneth Rogoff
The 2008 financial crisis in the US kicked off a debt supercycle, which spread to Europe in 2010 and has recently engulfed many of the world’s low-income and lower-middle-income countries. Could the debt woes of Country Garden, the behemoth Chinese real estate developer now facing billions of dollars in losses, augur the cycle’s next turn? The answer remains unclear. While the Chinese authorities have a remarkable track record when it comes to containing economic crises, the challenges posed by a significant growth slowdown, combined with high debt levels – especially…
China cuts key interest rate amid economic slowdown
China’s central bank has cut one of its key lending rates but left another unchanged, surprising economists who had expected more forceful action to support economic growth amid widespread concerns over its path. The world’s second-largest economy is in the midst of a slowdown, and has slipped into deflation with prices falling year on year as slowing domestic spending weighs on the country’s post-Covid economic recovery. The Chinese property industry is also in crisis, as the slowdown exposes overextended developers. Evergrande Group, once China’s leading property developer, filed for bankruptcy…
Homebuilder shares tumble as UK housing market weakens – business live
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China is too big for a Soviet Union-style collapse, but it’s on shaky ground
China’s economy is going through a rough patch. Growth is slowing and its property bubble has well and truly burst. Unemployment is rising. So what, you might say? Every country has difficult periods when past excesses catch up with it. Eventually the economic cycle turns and recovery begins. China is the world’s second biggest economy and has grown at a stupendous pace over the past four decades. It plays a pivotal role in the global economy and has invested heavily in advanced manufacturing and AI. Sure, it has problems but…
China’s property crisis deepens as developer Country Garden at risk of default
China’s property crisis deepened as two major developers faced severe financial difficulties that threaten to send shock waves through the country’s economy and beyond. Evergrande, the poster child for the woes of China’s property sector, filed for chapter 15 bankruptcy protection in New York on Thursday. The provision permits the company to protect its US assets and will allow cross-border bankruptcy proceedings as it undergoes a restructuring. The filing from Evergrande, which defaulted in 2021 after a liquidity crisis, came a day after China’s securities regulator notified the company’s Chinese…
China’s economy is struggling but fears of sustained deflation are premature
China’s economy is struggling. The recovery after the lifting of Covid-19 restrictions is faltering. Its trade with the rest of the world is shrinking. A decade-long boom in house prices has come to an end. The most obvious manifestation of the troubles besetting the world’s second biggest economy is that China is now officially in deflation. In the US, the UK and the eurozone, prices are rising – albeit not quite as fast as they were a few months ago – but in China they are actually falling. News of…