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The End of China’s Economic Miracle
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The End of China’s Economic Miracle

How Beijing’s Struggles Could Be an Opportunity for Washington

Adam S. Posen
Foreign Affairs, 2023
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The Chinese Communist Party is increasingly managing China’s economy via diktat, writes economist Adam S. Posen in this enlightening essay. He notes the long-term risks of this conduct for the global and Chinese economies: Excessive interference has reduced the ordinary Chinese citizen’s willingness to invest and spend locally, and simmering discontent, Posen predicts, could push more investment overseas, to other nations’ benefit. Executives, investors and students of political economy will find this an intriguing look at one aspect of China’s emerging economic challenges.

Summary

After its rebound from the COVID-19 pandemic, the Chinese economy has slumped.

China’s relaxation of its harsh COVID-19 restrictions initially boosted a moribund economy that had languished under the weight of forced sequestration, government-mandated testing and seemingly endless supply-chain shutdowns. Early 2023 saw an increase in domestic tourism and retail business. Yet by the middle of the year, growth had declined: Private sector investment and durable goods consumption had slowed markedly. Citizens preferred putting their savings into liquid bank accounts to making long-term investments.

China’s financial markets and economy are suffering from a bout of “long COVID.” This economic reversal is the latest iteration of a trend underway...

About the Author

Adam S. Posen is the president of the Peterson Institute for International Economics.

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